What is the difference between 'absolute' and 'minimum bid' auctions?

In the context of auctions, absolute auctions and minimum bid auctions serve different purposes, primarily characterized by how the bidding starts and the conditions for the items being sold. In an absolute auction, there is no reserve price, meaning that the seller is committed to selling the item regardless of the final bid amount, creating an opportunity for buyers to potentially acquire items at a lower price if the bidding does not reach high amounts. This makes absolute auctions highly competitive since bidders know that they will win the item at whatever the final bid is, prompting them to bid aggressively.

On the other hand, minimum bid auctions establish a starting threshold, or minimum bid, that must be met for the item to be sold. This ensures that the seller will not sell the item for an unacceptably low price and protects their interests. If the bidding does not reach this minimum amount, the item will not be sold, giving sellers more control over the auction outcome.

This distinction is crucial for both sellers and bidders to understand, as it affects their strategies and expectations during the auction process.