A supply chain as a network of auctions

We propose and study a model of supply chains as networks of auctions. Specifically, each company in our model is represented according to the Supply Chain Council's SCOR model, and the company's trading strategy is adapted from a model proposed by Steiglitz and colleagues. Our study of this model, implemented with the JASA auction simulator, shows that price dynamics are more complicated than simply balancing consumption demands, capacities for transformation, and raw material supplies. In addition, we identify three patterns of price dynamics, explain their cause, and propose rules linking initial market conditions with the occurrence of these patterns. (C) 2010 Elsevier B.V. All rights reserved.