Why a Auction?

When you have something to sell, the best way to get a good price for it is to hold an auction, conventional wisdom tells us. The success of the online giant eBay is a monument to that belief, and a lot of academic research supports it as well. Auctions aren’t just for ordinary folks trying to dispose of antique teddy bears or 1970s wallpaper, either. Executives routinely auction off divisions or subsidiaries of their companies; after all, who can fault them for the prices they get if those prices are the outcome of a competitive bidding process?

Auctions have gained popularity with buyers, too, especially since the advent of the internet. Back in the early 1990s, many procurement managers began to see reverse online auctions, in which suppliers competed for customers’ business, as the way of the future.