What is a "forward auction"?

A "forward auction" refers specifically to a scenario where buyers compete to purchase items. This type of auction is commonly used in various contexts, including online platforms, where multiple potential buyers place bids on a single item or multiple items being sold. The competitive nature of the bidding process arises from buyers trying to outbid one another, often leading to the final sale price being higher than the initial starting price.

In this scenario, sellers list their items for sale, and the auction facilitates a platform for interested buyers to indicate how much they're willing to pay, culminating in the highest bid securing the purchase. This structure is fundamentally what distinguishes a forward auction from other types of auctions or sales methods. The essence of a forward auction lies in the active participation of buyers, seeking to win the item by placing competitive bids against one another.

Other choices reflect different formats or characteristics that don't align with the definition of a forward auction. For instance, options discussing fixed prices or non-bidding scenarios do not capture the competitive bidding nature central to forward auctions. Thus, understanding that a forward auction emphasizes buyer competition clarifies why the correct choice fits this definition.