Forming Buyer Coalition Scheme with Connection of a Coalition Leader

Despite the variety of existing theoretical models for buyers’ coalition in the current e-commerce literature, no existing coalition scheme explicitly takes into consideration issues related to the leadership attributes of the coalition. By adopting a design science research methodology and utilizing theoretical groundings of the Social Networking and Game theory, the current article provides algorithmic design of a buyer coalition scheme with explicit focus given to the ‘betweenness’, ‘centrality’, and ‘closeness’ attributes of the coalition leader. Detailed steps for forming the proposed coalition are provided along with related algorithmic designs and explanations for each step. The execution of the proposed algorithmic design and its effectiveness compared to the situation where no leadership attributes is explicitly considered, are demonstrated by using a scenario and associated simulation programs. Results from the simulation programs confirm that the proposed model provides additional discounts for the buyers regardless the number of buyers within the coalition, and with no additional costs to the seller. It is also expected that sellers will benefit from the proposed model as a result of reduced transaction costs associated with the proposed scheme.