Operational Developments in Auctions

Describe the main operational developments in the auction market since the early 1950s

Introduction

There are many means and modes of selling work related to art and culture. The process of selling can take the form of private transaction and dealing between the customer and the seller or it can be sold through an auction. We are surrounded by auctions in many different forms, government indulge in auctions for the purpose of selecting contractors for franchises, millions of stocks are auctioned at New York stock market, fish auctioned at New England Fish Exchange (Smith, 1990, pp.3). An auction is further divided in to two types, the first and the most common form is that of an open action which takes place in an open environment with open outcry and the second option is that in which the customer or the buyer interested in buying the work provides with sealed bids and the information with regards to sealed bids and buyer is kept private. The era of 1970s in the world of auction brought many new concepts and ideas into light which formed the very basis of auction and increased transparency of the entire process.

Discussion

The era of 1970s revolutionized the auction business by brining prominent changes and innovation in the process of auctioning. The major and aim to bring about the modifications and changes in the business of auction was to accommodate and reflect the changes that have been brought at the level of world's economy as well as in the local society. The two international firms namely Christie's and Sotheby's were responsible for bringing innovations and modifications to the world of auctioning by introducing important concepts and ideologies of buy in, bidding numbers and referrals, buyer's premium, procedure of setting reserve prices, 5 year authenticity guarantee, setting of rhythm for the sale process and commissions. The concept of buy in was introduced to make the overall process of auctioning more transparent for the buyers as initially the work that was not sold was listed as sold and purchased by an imaginary buyer . The term buy in referred to the work that did not reach the reserve price of the work as set by the seller or did not sell during auction. The work that did not sell was brought in to be sold at some other auction, sold privately or removed from the market depending upon the decision and choice of the seller. Initially it was believed that once the item reached its hammered or knocked down price at auction, it was sold. But this was not the case and the item remained unsold especially if it failed to reach the reserve price or selling price set by the seller. The reserve price of the items is to be kept a secret so that the process of auction is fair and provides equal opportunities to all the buyers. It is reported that fake buyers were also employed to set the rhythm and tempo of the bidding process so that ...