Through SPECCX, a buyer of specialty crops makes an offer to buy, and a seller of specialty crops makes an offer to sell.
In making its offer, the buyer reveals to SPECCX a few things, including the maximum amount it wishes to buy, the maximum unit price it wishes to pay and the maximum distance from its location within which a potential seller must operate. Likewise, in making its offer to sell, the farmer reveals to SPECCX the maximum distance between a potential buyer it prefers, its marginal cost and its desired price-cost multiple. SPECCX passes these inputs to the SPECCX Price Mechanism, which computes the optimal bulk price and matches like-minded buyers and sellers. The farmer earns positive profit, and the buyer pays a bulk rate at an acceptable effective unit price. This all happens within fractions of a second, automating the execution and settlement of win-win transactions for both buyers and farmers of specialty crops.
Like any good marketplace, SPECCX matches a like-minded buyer and seller and then automates the generation of a well-informed, rational price that the parties may accept, cancel or counter. If and when the parties agree on the price, having agreed upon all other terms, including quantity, delivery date, time and place, a binding contract results, which the parties execute at the appointed time.
The matching algorithm of SPECCX matches a buyer of a commodity with a seller of a commodity. A match results between a seller and a buyer when the bid offered by the buyer is the highest bid and the highest bid exceeds the ask offered by the seller. The matchmaking of SPECCX resolves the coordination problem through standardization. The key to the matching algorithm is the SPECCX price mechanism, which maps terms agreed upon by the buyer and seller to a price.
The SPECCX Price Mechanism is the centerpiece of SPECCX. The mechanism is a mathematical framework derived from economic theory that implements an equilibrium outcome of a series of transactions whereby several profit-maximizing sellers, or farmers in our case, post non-linear, or bulk, prices to a buyer whose well-being depends positively upon two things: (1) consuming commodities and (2) having as much of its revenue, or ability to pay, as possible left over after having purchased commodities.