Auction Markets

Abstract

According to the “Oxford Concise Dictionary”, an auction market is a “public sale in which goods are sold to the highest bidder”. In this ordinary meaning, it is seen as a “public auction sale”. More generally, however, “auction markets” represent a specific method of exchange organization. An auction market is different from a market where the prices are posted and where a seller (buyer) enjoying some monopoly position faces buyers (sellers) placed in a more competitive situation. The posted price system simply offers an alternative: to accept or to turn down the exchange conditions, among them, the price. An auction market is also different from a market where prices are “negotiated”. On a negociated market, two partners discuss with each other and eventually agree on a price. The discussion and the price remain a private information between them. Each discussion is a unique event and can end up in its own result. However, on the basis of this definition, it is possible to point to a number of characteristic features of “auction markets”.