Electronic Call Market for Commodity Transactions: Design of Computer-Mediated Order Matching System

Ho Geun Lee, Ronald M. Lee

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Commodity exchanges provide potential market structures for electronic trading because commodity products have relatively simple and well-standardized product attributes. Most existing electronic trading systems are introduced for financial exchanges, where qualities of traded products (such as stocks and bonds) are homogeneous, thus taking into account only bid and offer prices for computer-mediated order matching. However, a single commodity market, such as the cotton or grain market, is made up of many heterogeneous goods that are similar to each other but have different product qualities and contract terms. In addition to the price, commodity traders have other pertinent preference ranges over product attributes and delivery conditions. We delineate an electronic call market system for commodity trading, which optimizes the realization of traders' utilities over extended product attributes beyond the price. The electronic call market not only maximizes the total surplus of market participants based on bid and ask prices but also satisfies their qualitative preferences over other attributes, which are difficult to include in the qualitative prices. The trading mechanism of the electronic call market integrates an economic auction model with a social choice model to produce a Pareto-improved transaction. Market simulations are conducted to validate the performance of the proposed electronic call market. The order matching system of the electronic call market is implemented using constraint logic programming.

Original languageEnglish
Pages (from-to)307-334
Number of pages28
JournalJournal of Organizational Computing and Electronic Commerce
Volume8
Issue number4
Publication statusPublished - 1998 Dec 1

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Logic programming
Cotton
Economics
Electronic trading
Financial markets

All Science Journal Classification (ASJC) codes

  • Information Systems
  • Computer Science Applications
  • Computational Theory and Mathematics

Cite this

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Electronic Call Market for Commodity Transactions : Design of Computer-Mediated Order Matching System. / Lee, Ho Geun; Lee, Ronald M.

In: Journal of Organizational Computing and Electronic Commerce, Vol. 8, No. 4, 01.12.1998, p. 307-334.

Research output: Contribution to journalArticle

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