Today English auctions have easily
moved into the electronic age and are carried out in real time with bidders
physically present on-site or electronically connected through the Internet or
by phone. The auctioneer opens the
bidding up at a low price and the competition among bidders is what drives the
price higher. Bidders shout-out prices
or raise their bid paddles, and online bidders submit their bids
electronically. The price of the item
continues to go up until all of the bidders but one drop out. By default, the highest bid wins the item.
Less commonly used is the
descending-bid auction or what is known as a Dutch auction. It works in a similar fashion as the English
auction in that it is interactive but prices start high and drop until bidders are
willing to accept a price that meets the seller’s reserve price. The strategy behind this method is that
bidders have to be aware of the competition they face and act quickly to secure
items. The term Dutch auction comes from
the fact that flowers in the Netherlands are sold using this process.
Another kind of auction is the first-price
sealed-bid auction or blind auction.
This is where all bidders simultaneous submit one sealed bid to the
seller. The sealed bids are opened all
at once and the winner of the auction is the highest bidder. Businesses and the government use this method
to procure services and to award contracts to the lowest bidder.
Second-price sealed-bid auctions
are also called Vickrey auctions. These auctions are done in the same method as
sealed first-price auctions but differ in the fact that the winning bidder does
not pay his bid amount but rather that of the second highest bid. This system encourages buyers to bid high
since they know they will not pay their bid price and is
similar to the bidding process used on eBay.
Wikipedia states that, “Vickrey auctions are also commonly employed in
digital advertising, powering real-time exchange environments for display
advertising, search engine marketing, and Facebook advertising.”
Sources:
cs.cornell.edu/home/kleinber/networks-book/networks-book-ch09.pdf
en.wikipedia.org/wiki/Auction#Types
Rabin Worldwide is an
international company that specializes in creating liquidity for complex manufacturing
facilities with idle or marginally productive assets. Rabin’s operations include selling entire
plants, multiple plant locations, or surplus individual items by auction or
liquidation and much more. Past auctions include names such as Hostess, Braniff
Airlines, Montgomery Ward, and the Railway Express Agency. Please contact us to discover how we may
assist with your asset liquidation process.
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