Crowdshipping platform as an intermediary: Auction-based mechanism design for order allocation and payment schemes

Abstract

<p>Crowdshipping has emerged as a novel service paradigm to move parcels by leveraging the latent capacity of traveling “crowd” from enormous traveling trips in the transportation system. This work investigates the order allocation and payment schemes for a crowdshipping platform through the lens of auction mechanisms. The crowdshipping platform is designed as an intermediary sitting between orders and travelers, which seeks the services provided by either the crowd carrier or the outsourced dedicated carrier. To ensure the sustainability of such platforms, the key challenge lies in matching orders to crowd carriers so that the payments are differentiated, crowdshipping platforms gain nonnegative profits and system efficiency is achieved. However, heterogeneity among individual crowd carriers exists and their preferences are not readily available. This motivates us to devise auction mechanisms for order allocation and payment of the crowdshipping platform. In the crowdshipping system, crowd carriers report their trip information (e.g., origin, destination, and available routes) to the platform and are recommended for some orders for each route. Then travelers select their intended orders and submit route-based bids based on the detour costs. The platform takes carriers’ strategic behavior into account and applies the classic VCG-like payment scheme to ensure incentive compatibility, individual rationality, and system efficiency. For the sake of computational efficiency, we design a greedy mechanism which retains most of the economic properties and provides an approximation guarantee. The profit gained by the platform can be lower bounded in both mechanisms. Extensive numerical experiments are conducted to test the performance of the proposed mechanisms.</p>