Negotiation supports in a commodity trading market

Advanced electronic trading systems, such as the third phase of the TELCOT system, provide a negotiation mechanism for traders. The purpose of such a negotiation mechanism is to make the trading procedure more flexible. In principle, an electronic trading system establishes an environment in which traders select their partners based on posted trading terms such as product bid/offer prices, product attributes, and trading terms. Most trading systems, including the first and the second phases of the TELCOT system, assume that trading terms are fixed once they are posted by traders. The third phase of the TELCOT system, on the other hand, allows buyers to negotiate prices of sellers' products. As a result, the third phase of the TELCOT system increases the total volume of products traded in the market. However, its negotiation capacity is restricted in that a buyer can extend only one counter-offer to a seller and it does not provide any support functions such as the negotiation price estimation. Assuming the improvement of the third phase of the TELCOT system, we propose negotiation support functions of the elicitation of a buyer's preference on sellers and the estimation of negotiation prices. The preference elicitation is based on hierarchical constraint satisfaction, which is a technique of multi-constraint decision making. The negotiation price estimation function is proposed as a function of a buyer's and seller's price requirements, and the market quote.

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