Group Buying on the Web: A Comparison of Price-Discovery Mechanisms

  • Anand K
  • Aron R
  • 116


    Mendeley users who have this article in their library.
  • 220


    Citations of this article.


Web-basedgroup-buying mechanisms are being widely usedfor both business-to- business (B2B) andbusiness-to-consumer (B2C) transactions. We survey currently operational online group-buying markets, andthen study this phenomenon using analytical models. We buildon the literatures in information economics andoperations management in our analytical model of a monopolist offering Web-based group-buying under different kinds of demand uncertainty. We derive the monopolist’s optimal group-buying schedule under varying conditions of heterogeneity in the demand regimes, and compare its profits with those that obtain under the more conventional posted-price mechanism. We further study the impact of production postponement by endogenizing the timing of the pricing and production decisions in a two-stage game between the monopolist and buyers. Our results have implications for firms’ choice of price-discovery mechanisms in e-markets, and for the scheduling of production and pricing decisions in the presence (and absence) of scale economies of production.

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document


  • Krishnan S. Anand

  • Ravi Aron

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free