What type of auction is characterized by the auctioneer starting a bidding process at a set price?

A reserve auction is characterized by the auctioneer starting the bidding process at a set price, known as the reserve price. This price represents the minimum amount the seller is willing to accept for the item being auctioned. The auctioneer will not sell the item unless bidding meets or exceeds this reserve price, meaning that it serves as a safeguard for the seller.

In this type of auction, once bidding starts at the set price, participants can offer higher bids until the auction concludes. If the highest bid does not meet the reserve price, the seller has the option to reject all bids and retain the item. This mechanism provides transparency to bidders while still enabling the seller to establish a baseline that reflects their expectations for the auctioned item.

Understanding this structure is crucial for both sellers and buyers in navigating the auction process effectively, ensuring that their interests are protected.