French Auction
A French auction is a bidding process where the price starts high and is gradually lowered until a buyer accepts the current price. This method is often used in the sale of government securities and other high-value assets. French auctions are designed to ensure competitive pricing by discovering the market-clearing price through a dynamic pricing process. The approach can help sellers achieve optimal prices while reducing the risk of unsold inventory.
Key Takeaways
- Price starts high and lowers until a buyer accepts.
- Commonly used in government securities sales.
- Ensures competitive pricing.
- Helps discover the market-clearing price.
