Distinguishing The Differences Between Auctions

Distinguishing The Differences Between Auctions



It seems like new information is​ discovered about something every day. and​ the​ topic of​ auctions is​ no exception. Keep reading to​ get the​ most current auction information available.

Learn about the​ differences between various types of​ auctions, on and​ offline.

English auction: This is​ what most people think of​ as​ an​ auction. Participants bid openly against one another, with each bid being higher than the​ previous bid. the​ auction ends when no participant is​ willing to​ bid further, or​ when a​ pre-determined "buy-out" price is​ reached, at​ which point the​ highest bidder pays the​ price. the​ seller may set a​ 'reserve' price and​ if​ the​ auctioneer fails to​ raise a​ bid higher than this reserve the​ sale may not go ahead.

Dutch auction: in​ the​ traditional Dutch auction the​ auctioneer begins with a​ high asking price which is​ lowered until some participant is​ willing to​ accept the​ auctioneer's price, or​ a​ predetermined minimum price is​ reached. That participant pays the​ last announced price. This type of​ auction is​ convenient when it​ is​ important to​ auction goods quickly, since a​ sale never requires more than one bid.

The Dutch auction is​ named for​ its best known example, the​ Dutch tulip auctions; in​ the​ Netherlands this type of​ auction is​ actually known as​ a​ "Chinese auction". "Dutch auction" is​ also sometimes used to​ describe online auctions where several identical goods are sold simultaneously to​ an​ equal number of​ high bidders. Economists call the​ latter auction a​ multi-unit English ascending auction.

Sealed High-Bid Auction: in​ this type of​ auction all bidders simultaneously submit bids so that no bidder knows the​ bid of​ any other participant. the​ highest bidder pays the​ price they submitted.

Vickrey auction: Also known as​ the​ sealed second-price auction. This is​ identical to​ the​ sealed high-bid auction, except the​ winning bidder pays the​ second highest bid rather than their own.

Silent auction: This is​ a​ sealed variant often used in​ charity events, but involving the​ simultaneous sale of​ multiple items. Participants submit bids normally on paper, near the​ item. They may or​ may not know how many other people are bidding or​ what their bids are. the​ highest bidder pays the​ price they submitted.

Procurement auction: This kind of​ auction reverses the​ roles of​ seller and​ buyer. the​ buyer puts out an​ RFQ for​ a​ given commodity and​ providers offer progressively lower prices in​ hopes of​ getting the​ business. at​ the​ end of​ the​ auction, the​ lowest bid wins.

Digital art auction: in​ this indefinitely long auction, designed for​ unreleased works that are trivially reproducible at​ zero cost (recordings, software, drug formulae), bidders openly submit their maximum bids. the​ seller may review the​ bids and​ close with a​ price of​ their choosing at​ any time. the​ successful bidders that pay this price are those whose bid meets or​ exceeds it.

Open outcry auction: This type of​ auction can refer to​ any auction where the​ auction is​ conducted orally for​ people to​ hear typically used in​ stock exchanges and​ commodity exchanges, where trading occurs on a​ trading floor and​ traders may enter verbal bids and​ offers simultaneously. This type of​ auction is​ being replaced by electronic trading platforms.

Unique bid auction: in​ this type of​ auction users post blind bids and​ are given a​ range of​ prices they can place a​ bid in, often a​ capped limit. the​ highest, or​ lowest, unique bid wins. for​ instance an​ auction is​ given a​ maximum bid of​ 10. if​ the​ top five bids are 10, 10, 9, 8, 8 then 9 would be the​ winner being the​ highest unique bid. This is​ a​ popular online type of​ auction.

Buy-out auction: This auction has a​ predetermined buy-out price in​ which the​ bidder can end the​ auction by accepting the​ buy-out price. the​ buy-out price is​ set by the​ seller. the​ bidder can choose to​ bid or​ use the​ buy-out option. if​ no bidder chooses to​ utilize the​ buy-out option, the​ auction ends with the​ highest bidder winning the​ auction. You can often find this type of​ auction on eBay.

Be sure you understand the​ type of​ auction you are participating in​ before it​ starts. Sometimes mistakes made at​ an​ auction can smart and​ be costly if​ you don't know what you are doing.




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