auction

An auction is a method of selling goods or services by competitive bidding. An item is offered for sale, and buyers submit bids. The highest bidder usually wins and pays the price of their bid, subject to any reserve price or terms set by the seller.

There are several auction formats. In an English auction, bids rise openly and the highest bidder wins. In a Dutch auction, the price starts high and falls until a bidder accepts. Sealed-bid formats require private bids; the highest bid wins in a first-price sealed-bid sale, or, in a second-price (Vickrey) format, the winner pays the second-highest bid. Online and live auctions often combine these rules with platforms, proxies, and automated bidding.

Auctions can be conducted in person, online, or through hybrid arrangements. Core terms include bid, bid increments, reserve price, buyer’s premium, and lot. The auctioneer or platform manages timing, records bids, and enforces payment and delivery conditions. Items are grouped into lots or sold individually.

Auctions are used for cars, real estate, art, antiques, livestock, industrial goods, and general merchandise. They aim to efficiently match supply with demand, reveal market value, and provide liquidity. They carry risks such as price volatility and fraud, which regulations and platform safeguards seek to mitigate.

Online auctions have broadened access and speed but raise concerns about buyer protection, authenticity, and title transfer. Jurisdictional rules govern contract formation, consumer rights, and anti-collusion. Some auctions impose seller fees, buyer’s premiums, or shipping restrictions.

The concept dates to ancient and medieval markets. Modern auction design is studied in economics as auction theory, addressing bidding strategies and revenue outcomes, including principles that influence pricing and seller revenue.