The OTF provider's procurement problem takes customers' needs into account and requires simultaneous transactions with suppliers. Subproject A3 analyzes different forms of organizing this allocation problem. We discuss models from cooperative bargaining theory, in particular multilateral interdependent problems and bargaining problems with incomplete information (about service quality). The study of matching markets and appropriate matching mechanisms complements the analysis.
Price and Competition
The central entity that drives competition among the various participants is the sales price of single services as well as service compositions. Since composed services are typically inhomogeneous products, a market equilibrium not only specifies prices but also further quantities such as product quality and the degree of product differentiation. This applies to competition among OTF providers as well as to competition among suppliers.
Evaluation of Quality
To minimize frictions in the market, it is important to adequately deal with the presence of asymmetric information on service qualities. We investigate in how far a reputation system can serve to reduce such asymmetries. The analysis has to include clients' strategic behavior, bounded rational behavior as well as learning algorithms that shall predict service qualities.