Comparative Analysis of Auction Types: English, Dutch, and Sealed Bids

This report provides a comprehensive analysis of various auction mechanisms, including English, Dutch, sealed bid first-price, and Vickery auctions. It begins by defining and contrasting the English and Dutch auctions, highlighting their differences in bidding processes and the quantities of items sold. The report then compares sealed bid first-price and Vickery auctions, discussing their distinct approaches to bid submission and price determination. It further examines the use of English auctions by companies like Concierge Auctions Ltd, suggesting alternative auction types to enhance transparency and restore bidder confidence. The report also explores the importance of auctions in product and service sales, emphasizing the benefits for both companies and procurement processes. It suggests the Dutch auction as the best approach for procurement due to its ability to secure favorable prices and maintain product quality. The report also discusses the advantages and disadvantages of auctions for non-profit organizations, as well as strategies for companies to leverage auctions to uncover asset values and increase revenue, including pre-auction valuation and the selection of optimal auction types. The report concludes by referencing key academic sources that support the analysis.

Running head: AUCTIONS
Auctions
Name:
Institution:
Date:

Running head: AUCTIONS
Question 1
The English style of auction is an auction in which an item is sold through an opening bid
that is suggested by the seller and which the price generally increases.it is an open outcry process
in which the buyers place bids on the item and the seller accepts the higher bid as it comes. This
is done until the item is bought by the highest bidder.in this style, there is a reserve price that is
set and which has to be met by the bidders. The seller can decided to take the item of the market
if the reserve price has not been met or if no buyer places an economically fair bid ( Hubbard, &
Paarsch,2016).
The Dutch style of auction is a form of auction in which the price of an auction is reduced
until that time that a buyer will be found.it is commonly known as the descending price auction
in the sense that they set the price at a higher bid than the original value of the said items which
is then reduced until the items is purchased. The item however has a minimum price that the
seller cannot ago under at the time of auctioning.it is referred to the Dutch auction as it is
normally used in the flower business in Holland (Mochón, & Sáez,2015).
The two types of auction are comparable in the sense that they both aim to sell a
particular asset. The end game of the auction is to ensure that the items are disposed of.
The major difference between the two types of auction is the process if bidding. The
English auction favors the increasing price system while the Dutch auction favors the decreasing
price auction. The price at which the item is sold for the English auction is always higher while
that of the Dutch auction is relatively low.

Running head: AUCTIONS
Also, the quantities that are sold in the two auctions differ a lot. For the English auction,
there is only one quantity that is being sold and which the bidders are fighting for. On the other
hand, the Dutch auction is one that involves a number of identical items to be sold. This is in the
case of flowers whose quantities are huge (Alaei, Hartline, Niazadeh,, Pountourakis, &
Yuan,2018).
B
The sealed bid first price is a type of auction in which the bidder only gets one
opportunity to carry out his bid.in this form of auction, each of the bidders write their prices in a
piece of paper and submit it to the auctioneer. The person who will have indicated the highest
price will be declared the winner and the bidding process will close ( Bergemann, Brooks, &
Morris,2017).
The Vickery auction is a sealed bid in which the bidders are required to submit their bids
without the knowledge of each other bids. The unique thing with Vickery is that the price that
will be paid for the item is the second highest bid rather than the winning bid.
The sealed bid first price and the Vickery auction contrast in the sense that one takes the
highest bid that has been submitted while the other goes for the second highest bid. Also, the
Vickery auction allows an individual to bid only to his maximum potential unlike the sealed bid
in which it exposes one to bid more than he would have wished for in order to obtain the item
( Carroll, & Segal,2018).
The two auctions are comparable in the sense that none of the other bidders is able to
know exactly what the amount that the other bidder is bidding and thus none of the bidders is
able to feel disadvantage by the bidding process.

Running head: AUCTIONS
Question 2
The English type of auction advocates for the increasing price in which the value of san
item can be increased significantly as long as there is a bidder who is willing to purchase it. The
concierge auctions limited have been using this type of auction over the years which has led to
numerous suits against them due to the over value of properties that they have been auctioning.
They have been accused of false and deceptive business practices. They have been selling
properties at the highest price in which it is suspected that they at times pursue the bidding
process in order to get extra ordinary values for the properties ( Chow, Hafalir, & Yavas,2015).
Concierge auctions ltd should therefore consider another type of auction in order to
restore the confidence of the bidders in their auction process. They can decide to go ahead with
the sealed bid first price in which the bidders will only state their price without the influence of
the prices of other bidders. The bidder who is willing to pay the highest price will therefore be
given the property. This type of auction encourages the issue of transparency in the bidding
process and also ensures that the bidders do not pay so much for against the real value of the
property (Cypher,Price, Robinson, & Seiler,2018).
Question3
A
There is need to have an auction when it comes to dealing with product or service sale as
it will ensure that the company gets the best price out of the bid. The buyers are encouraged to
state the prices that they will be willing to offer for the product and the company is able to
choose based on the price offered .auction is also important in products as the company through
the procurement process may decide to carry it out in order to obtain certain products. The

Running head: AUCTIONS
suppliers are encouraged to do their bids and the terms that they will provide.in the end, the
company will pick the supplier who will have provided a reasonable price and accepted terms
and conditions (Einav, Farronato, Levin, & Sundaresan,2018).
B
The best type of auction that can be used when dealing with procurement of a product is
the Dutch auction. This is because the bidders are normally encouraged to state their bids low but
with better terms in order for them to be accepted. This will ensure that the firm does not pay
highly for the product and also the quality of the product is maintained at all times.
Question 4
Nonprofit organizations carry out auctions which in the end generates revenue to them.
This auction is mainly done in order to dispose of some of the properties that are no longer in use
or which have been deemed obsolete. The advantage of carrying out this action is that the
organization is able to get funds for products that may otherwise may have been left to rot.in
most cases, the auction results to the items being sold sat a price which is higher as compared to
if the product had been given to a particular person. They can therefore use the funds to advance
the interest of the organization ( Hopenhayn, & Saeedi,2016).
The major disadvantage of using auctions for nonprofit organizations is the fact that once
they engage in it, they are normally viewed as having interest in making profits. The perception
of the public towards them as nonprofit organization changes and also this leads to their motive
being questioned. They are believed to compete with other profit organizations to make money
Question 5

Running head: AUCTIONS
It is important for the company to use auctions in order to uncover the value of assets and
also increase revenue. This can be done by ensuring that the firm determines the original value of
the items to be put in auction before such a process begins. This will ensure that the auction will
in the end bring about a price that is way above the original value and thus the firm can be able
to make some bit of revenue. The auctions will also help the firm in increasing revenue as they
will determine the best type of auction that is suited for their assets. The firm needs to ensure that
they have analyzed the different types of auctions that are there and the strengths that they
possess in relation to the kind of business that they are engaged in. This analysis is important as
the firm will be aware of the most efficient way of conducting the auction in order to disclose the
true value of the items and also to increase their revenue in the long run ( Morgenstern, J., &
Roughgarden,2016).

Running head: AUCTIONS
References
Alaei, S., Hartline, J., Niazadeh, R., Pountourakis, E., & Yuan, Y. (2018). Optimal auctions vs.
anonymous pricing. Games and Economic Behavior.
Bergemann, D., Brooks, B., & Morris, S. (2017). First‐Price Auctions With General Information
Structures: Implications for Bidding and Revenue. Econometrica, 85(1), 107-143.
Carroll, G. D., & Segal, I. R. (2018). Robustly optimal auctions with unknown resale
opportunities. Available at SSRN 2828426.
Chow, Y. L., Hafalir, I. E., & Yavas, A. (2015). Auction versus negotiated sale: evidence from
real estate sales. Real Estate Economics, 43(2), 432-470.
Cypher, M., Price, S. M., Robinson, S., & Seiler, M. J. (2018). Price signals and uncertainty in
commercial real estate transactions. The Journal of Real Estate Finance and
Economics, 57(2), 246-263.
Einav, L., Farronato, C., Levin, J., & Sundaresan, N. (2018). Auctions versus posted prices in
online markets. Journal of Political Economy, 126(1), 178-215.
Hopenhayn, H., & Saeedi, M. (2016). Bidding Dynamics in Auctions (No. w22716). National
Bureau of Economic Research.
Hubbard, T. P., & Paarsch, H. J. (2016). Auctions. MIT Press.
Morgenstern, J., & Roughgarden, T. (2016, June). Learning simple auctions. In Conference on
Learning Theory (pp. 1298-1318).
Mochón, A., & Sáez, Y. (2015). Understanding auctions. Cham: Springer.

Running head: AUCTIONS