Abstract: Procurement using electronic reverse auction is an important method for enterprises and government to reduce procurement cost. However， due to the different cost structure of different type supplier， it is difficult to carry out the mechanism of electronic reverse auction successfully. Considering two types of cost structure supplier， i. e. distributor and manufacturer， mechanism design of electronic reverse auction was studied. The basic mechanism was designed at first， which included the bidding strategy of supplier and allocation strategy of purchaser. The result revealed that the basic mechanism was efficient for the auction when the supplier was distributor. After that，taking into account the basic mechanism cannot achieve the convergence of manufacturer auction， an improved mechanism with limited strategy was proposed. The improved mechanism could achieve the convergence of manufacturer auction. Numerical simulation based on Matlab showed the efficiency of proposed mechanisms.

Key words: electronic reverse auction, mechanism design, cost structure, bidding strategy, allocation strategy