Auction and its benefits

An auction is basically a public sale wherein any object is sold
to the highest bidder. It can be defined as a process of
purchasing and selling things by offering them up for bid,
taking bids and selling the things out to the highest bidder.
This is what is generally the case. However, a sale to the
lowest bidder may also take place, in cases where land is sold
for non-payment of taxes to anyone willing to take it for the
shortest term; or where a contract is offered to an individual
or party willing to take it for the shortest term; or where a
contract is offered to an individual or party willing to perform
it at the lowest price. Such cases too seem to fairly come under
the purview of the term ‘auction’.

In case of auction the seller presents the products on a public
platform. The selling price of the products are determined by
the bids or offers of buyers interested in buying them based on
their individual estimation of value of and need of the
products. The person offering the highest bid at closing of
auction receives the right to purchase the products at the bid
price. The winner of the bid is normally legally bound to buy
the item auctioned. In recent times auctions have been conducted
online.

The benefits of auction are many. Some of the significant
advantages are:

a)The auctioned item fetches the highest price in the given
situation. Thus, in a way there is the maximization or
optimization of profit.

b)At an auction the goods are almost certainly disposed off
after bidding by their sale to the highest bidder. Hence, this
serves as the right podium for disposing or selling out of
accumulated goods. Otherwise, business could have become
stagnant due to the stocking of these goods. Certain items could
also have perished (in case of perishable goods) or expired if
not sold out in time.

c)In case of auctioning a variety of articles may come up for
sale, which may not be otherwise available in the market. The
buyer can get quite urprised by looking at a treasure trove of
antique articles available at an auction.

d)An auction can also be considered as a method for estimating
the value of certain commodities which have hitherto
undetermined or variable prices.