Auction Types

Auction - a public sale of goods, securities, property of enterprises, works of art, and other objects, which is carried out according to predetermined auction rules. The principle common to all auctions is the principle of competition between potential buyers. In the process of competition between buyers for the right to purchase goods, the auction winner is revealed. The winner of the auction is the person who won the auction in accordance with its rules. In this case, the object is acquired by the auction winner.

The organizers of commodity auctions can be individual large trading companies, unions or associations of sellers or special auction brokerage firms.

Specialized large firms representing trade monopolies, which act as organizers of the auction, offer, as a rule, goods purchased at auctions at their own expense. Along with this, they accept for sale on a commission basis products belonging to manufacturers, associations or cooperatives of farmers.

From the point of view of pricing technology, two types of auctions are distinguished:

1. Auction with a price increase (English auction), the winner of which is the person who offered the highest price.

2. Auction with price reduction (Dutch auction), the winner of which is the person who first agreed to pay the price offered at the auction.

The organization and technology of international auctions have their own characteristics, which are determined by the nature of the goods. However, their organization has a lot in common, there are four stages of auctions: preparation, inspection of goods, auction bargaining, registration and execution of the auction transaction.

Types of auctions:

by type of initiative: coercive (realization of property confiscated on one or another legal basis) and voluntary auctions (held at the initiative of the seller).

according to the list of participants: open (anyone can participate) and closed (only specially invited persons by the auction organizer take part).

Types of auctions

Open auction - an auction, during the passage of which participants see the bets of all their opponents. A classic example is the English open auction.

Closed auction - an auction, during the passage of which participants do not see the bids of their opponents and cannot change their bids. Applications are submitted in closed form (in envelopes) - each participant directly, without disclosing publicly, informs the auctioneer the size of his bid.

The auction of the first price is a closed auction, in which the winner is the participant with the highest price and this price is subject to payment. Usually closed auctions are first price auctions.

The second price auction is a closed auction, in which the winner is the participant with the highest price, but he must pay the “second price”, that is, the price of his closest competitor. Today is not widely used.

Double auction - a generalized form of the auction, denoting a situation where more than one seller and more than one buyer participate in it, simultaneously reporting their rates to the auctioneer, who then determines the equilibrium price at which transactions between sellers and buyers are made, the rates of which were no worse than this price.

English auction is the most common type of auction, which provides that buyers offer a step-by-step price increase for the goods until one auctioneer remains - the winner. It is also called the "auction for a raise."

A Dutch auction is an auction in which bargaining begins at a very high price and is being lowered until a buyer is found willing to buy at the announced price.