An auction is a special form of conclusion of a sales contract, which is used very often for the award of contracts in the industrial goods sector.
In an auction, a prospective buyer (bidder) makes a binding offer to a seller (auctioneer) for an item to be auctioned. The most common auction types held are the English, Dutch, and Vickrey Auction. The English Auction is the classic form of auction. Starting from a minimum price, prospective buyers openly outbid each other until the point is reached that no one exceeds the top bidding price for a certain period of time. The Dutch auction is a descending price auction. The price starts to fall from a starting price higher than the original value of said items. The contract is awarded to the first customer, or highest bidder, who agrees to the price. The Vickrey auction, or also known as Second-Price Sealed Bid Auction, is a blind auction, which guarantees that the bidders submit only one bid, representing their actual willingness to pay. The highest bidder closes out the bid, but pays the second highest bid rather than his own bid.