- In electronic markets, both bundle search and buyer coalition formation are profitable purchasing strategies for buyers who need to buy small amount of goods and have no or limited bargaining power. In this paper, we present a distributed mechanism that allows buyers to use both purchasing strategies. The mechanism includes a heuristic bundle search algorithm and a distributed coalition formation scheme, which is based on an explicit negotiation protocol with low communication cost. The resulting coalitions are stable in the core in terms of coalition rationality. The simulation results show that this mechanism is very efficient. The resulting cost to buyers is close to the optimal cost. 2005 Elsevier B.V. All rights reserved.