A Two-Stage Mechanism in Assembly System with Supplier Coalitions under Asymmetric Information

We study the allocation of benefits in a whole-set equipment assembly supply chain with exogenous supplier coalition structure under asymmetric information. Considering the information revelation problem, a two-stage mechanism is proposed, which analyzes the competition and cooperation in the assemble system. In the first stage, an almost BB VCG auction is proposed, in which supplier coalitions compete with each other and the assembler procures components from the coalitions who win the order to assemble the final product. In the second stage, suppliers in coalitions who win the order allocate the benefits of the coalition, using the Shapley approach. We show that the mechanism holds incentive compatible and individual rationality.