On October 17, Kai Wendt presented his research on Behavioral Simulation of Blockchain-enabled Market for Supplier Capacity Trading Among Retailers at the Annual INFORMS Conference in Indianapolis, Indiana, USA. Co-authors of the working paper are Professor Volodymyr Babich (Georgetown University), Daniel Hellwig (WHU and Kepler Cannon), Prof. Dr. Arnd Huchzermeier.
We study markets for trading supplier capacity among retailers facing random demands and varying goods valuations. Retailers buy claims on supplier's capacity before knowing their demand and trade them after demand realization. Two novel trading strategies emerge. Players, whom we call spot sellers, buy more claims than the maximum demand initially and sell excess to the market. Other players, whom we call spot buyers, buy few claims from the supplier, using the market instead. These strategies reinforce each other, reduce a player's demand risk, and contribute to the reduction of mismatch between supply and demand. In small markets, clearing prices are correlated with the product values and the net demand. But in large markets, clearing prices are anchored to the capacity reservation price and do not reflect either product values or the net demand.