A method, system and computer program product for conducting an online auction of a plurality of heterogeneous items between a plurality of selling and potential purchasing parties. The method includes the steps of accepting an offer in respect of an item, accepting one or more subsequent offers that is/are preferable to a previously accepted offer, and rejecting the previously accepted offer. While the offer/s is/are binding on a party making the offer, acceptance of the offer/s is/are not binding on a party accepting the offer. Classes of “seller strategies”, for offering items to potential purchasing parties, and “buyer strategies”, to decide which offers to accept, are also disclosed. As a result of the interaction of the buyer and seller strategies, the auction mechanism converges to an allocation of items to buyers at particular prices and assists in discovering a free and fair competitive equilibrium price. The auction is performed using terminals connected via a communications network and software-based agents hosted on the terminals, wherein the software-based agents act on behalf of the participating parties.