Title: Designing Coalition-Proof Reverse Auctions over Continuous Goods,
Abstract: This paper investigates reverse auctions that involve continuous values of
different types of goods, general nonconvex constraints, and second stage
costs. We seek to design the payment rules and conditions under which
coalitions of participants cannot influence the auction outcome in order to
obtain higher collective utility. Under the incentive-compatible
Vickrey-Clarke-Groves mechanism, we show that coalition-proof outcomes are
achieved if the submitted bids are convex and the constraint sets are of a
polymatroid-type. These conditions, however, do not capture the complexity of
the general class of reverse auctions under consideration. By relaxing the
property of incentive-compatibility, we investigate further payment rules that
are coalition-proof without any extra conditions on the submitted bids and the
constraint sets. Since calculating the payments directly for these mechanisms
is computationally difficult for auctions involving many participants, we
present two computationally efficient methods. Our results are verified with
several case studies based on electricity market data.