Selling the Nation's Helium Reserve (2010) / Chapter Skim
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Appendix E: Auction Types
Appendix E: Auction Types
Pages 130-131
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From page 130... ...
Increasingly, however, such auctions are being held electronically; • The descending bid, or Dutch auction, in which the price is lowered until someone agrees to the price; • The first price, sealed-bid auction, in which the buyers put in secret sealed bids and the highest bidder wins the good at the bid price; and • The second price, sealed-bid auction, or Vickery auction, in which buyers put in sealed bids and the highest bidder wins the good at the second highest bid price. An early theoretical result from auction theory is that under risk neutrality, independent values, free entry, and competitive bidding, the four mechanisms yield identical expected revenue and each bidder should bid his or her estimate of the true value for the object.
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From page 131... ...
Since it is easier to collude in a second price, sealed-bid auction, a firstprice, sealed-bid auction is the best choice for helium sales. Such sales, however, would require open access to the Cliffside reserves or to swaps, and this access would require monitoring by BLM or some other regulatory body.
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