The most prevalent form of bidding structure for an auction is the English auction. The auctioneer starts with a reserve price , which is the lowest price at which the seller of the good will part with it. When no participant is willing to increase the bid further, the item is rewarded to the highest bidder. Another form of auction is known as a Dutch auction , due to its use in the Netherlands for selling cheese and fresh flowers. In this case the auctioneer starts with a high price and gradually lowers it by steps until someone is willing to buy the item.
Dutch auctions can proceed very rapidly , which is one of their main virtues.
Yet a third form of auctions is a sealed - bid auction. In this type of auction, each bidder writes down a bid on a slip of paper and seals it in an envelope. The envelopes are collected and opened, and the good is awarded to the person with the highest bid who then pays the auctioneer the amount that he or she bid. If there a reserve price, and all bids are lower than the reserve price, then no one may receive the item. Sealed - bid auctions are commonly used for construction work.