Auction in the simple sense is the augmentation of the value of a thing or product in the process of buying and selling. In the conventional marketing and business the price of a thing or product is fixed and the buyer needs to purchase it from the place that it is sold. The auction of a thing is entirely different from the conventional business. The history of auction can be traced back to 500 BC. There are biblical references given to auction. In the Roman Empire auction had great importance. 193 AD was a historical period in the time of the Roman Empire. For the very first time in the history an empire was auctioned that became the root cause of a civil war. Emperor Petrinax was murdered by the Praetorian Guard and the empire was put for an auction. Didius Julianus for an amount of 6,250 drachamas bought every guard of the empire through auction. By the decline of the Roman Empire the auctions lost their acceptance by the end of 18th century.
During 18th and 19th century in England auction by candle was conducted in some regions of the country. After lighting a candle the bid amount in an ascending order used to be call in the auction hall and the highest amount of bid that is called at the time when the candle is extinguished became the auction bid. After the French Revolution the auctions were conducted in coffee shops and taverns. Elaborate description about the items to be auctioned was printed in catalogues.
The world’s largest auction house “Christie’s” was established in the year 1766. The second largest auction Sothebey’s is the world’s second largest auction house. Some of the auction houses that were found during the 17th and 18th centuries are still functioning. Some of them are Bonham’s, Dorotheum, Mallams, Philips De Pury and company, Freeman’s and Lyon and Turn bull established in the year 1793, 1707, 1788, 1796, 1805 and in 1826 respectively.
There is no hard and fast rule for the items to be sold in an auction. The nature of auction may differ. There are various types of auction classified in to primary and secondary auction. The primary auction includes English auction, Dutch auction, sealed first price auction, Vickrey auctions and multi unit auctions.
The English auction is the most widely practiced auction for goods including antique, artworks, second hand goods and real estates. The bid for the goods will be in the ascending order and the highest bidder will won the auction.
Dutch auction is opposite to English auction were bidding is in the descending order as this type of auction is commonly used for perished and short life goods. The auctioneer’s prices need to be accepted by the bidder.
Sealed first price auction is conducted by companies, institutions and organizations where the bid amount is sealed and will be opened at the time of auction. The highest bid amount from the sealed prices will be the auction amount.
Vickrey auction is the sealed second price auction where the second highest sealed big amount will be the auction price.
Secondary auction include all pay auction, auction by the candle, bidding fee auction, buy out auction, combinatorial auction.
In all pay auction highest bidder wins the auction for competitions regardless the bidder win or not.
Auction by candle is used for selling ships for the highest bid when the lighted candle extinguishes.
Buy out auction is when the bidder can bid additional set price.
Combinatorial auction is where the bidder can bid for more than one item in the auction.
Today bidding is popular all over the world and according to the report of National Auctioneers association the accumulated revenue of the auction in agriculture, machinery, equipment, real estate is 268.4 billion dollars. The important aspect of auction is the bidder can assess the value of a thing before he bids for it.