Application of auction theory in the context of the Indian Premier Essay

Application of auction theory in the context of the Indian Premier League - Essay Example This theory is highly essential from a theoretical, empirical and economic perspective. This paper aims to discuss the main principles of the auction theory along with the considerable issues and their solutions associated to the phenomenon of auction market. For this paper, we shall consider an example of the Indian Premier League (IPL) to relate it with the relevant theoretical principles of the auction theory. Auction Theory: Auction theory is a branch of economics which takes a number of concepts into analysis that includes the risks, behaviors, challenges and activities of bidders within the auction processes. The process of auction has been used from earliest traces of economic activities. Economists have contributed in the auction theory including Vickrey (1961), Griesmer, Levitan and Shubik (1967) etc. Extension of Auction theory is referred to as theorem of revenue equivalence (see appendix 1.1). As per the contributions of different economists, there are four standard types of auctions. These bids are commonly known as the English Bid, the descending bid which also known as the Dutch bid, first sealed bid and a second seal bid. Each one is unique and possesses interesting factors, which grasp attention of the interested buyers (Besanko and Braeutigam 2000). Now we shall analyze each type of bid separately supported with relevant examples. English Bid: According to Gul and Stacchetti (1999), English bid is a type of bid that slowly goes higher. Sometimes this type of bidding appears as most simplistic, however at the same time it can create complexities for both buyers and sellers. English auction begins with a bid which is placed by an auctioneer who places the starting bid which is a given price of the product being sold. The bids are then placed one by one in an increasing order. English bid is different from other bids such as sealed bids because it is open to all bidders with no policy of hiding (Gul and Stacchetti 1999). The one who makes the highest bit wins the product. In this type of bid prices increase comparatively with small margins and the buyers intend to win the item at low price than its original value at which the product bidding started i.e. starting bid. For example, there is a likelihood of quick sale of a car during an auction as the standing bid will be lowest, which will be affordable for a sing le buyer, who will finally take the commodity home (Auctus Development, Inc, 2004). It should also be noted that the English auction can be win by the standing bidder which can only be displaced by a competitively higher bid than the standing bid (Jaiswal 2010). Furthermore, Klemperer (1997) noted that English bids or ascending bids are usually used for selling household items such as cars, appliances, furnisher and sometimes properties as well. This type of bid facilitates sellers to make great sum of money and an amazing opportunity for the buyers to win the bid (Klemperer 1997). A reserve or minimum price is charged for house hold commodities in English auction (Auctus Development, Inc 2004). Dutch Bid: According to Besanko and Braeutigam (2000), the Dutch system is entirely

Internationalization in general and the internationalization of Essay

Internationalization in general and the internationalization of Universities in particular - Essay Example Both will continue, with firms increasing globalisation by responding to changing macro and operational markets to increase both efficiency and profits. The primary globalisation drivers are the loss of barriers between nations, allowing new trading relationships to develop and change driven by technology. During the early stages of globalisation, companies actively made the decision to globalise, and did so in small steps. It is now assumed that all firms will globalise unless they have a good reason not to (Yip, 2001, p.358). One of the main reasons for globalising, is the increasing rate of change in technology, especially the Internet. Even the smallest organisation can trade globally as long as they have an appropriate web site and can set up the appropriate supply chain for delivery to the customers. Yip also identified three main forms of multinational companies (MNCs): internationalist, federalist and global maximiser (ibid, pp.359-362). The federalist is the traditional MNC. The global maximiser uses pure strategy when formulating growth plans. For an SME deciding to internationalise, the internationalist strategy appears most suitable. An internationalist strategy is used by a company with a secure position within its home market/nation. Foreign activities are opportunistic rather than strategically planned and intended. The test, according to Yip, is whether or not the company could survive purely on the revenue and profit streams of the domestic business (ibid, p.359). This would also be an appropriate approach for a university seeking to expand overseas for the first time, although the use of the Internet and well-constructed, culturally appropriate learning materials with well-trained teaching staff might negate the need to physically expand overseas at all. Kaarna (2010) makes use of the internationalisation framework when considering whether â€Å"different theories for explaining the accelerated internationalisation† (p.556). He found, a s part of his initial investigations, other researchers’ work, undertaken in 2000-2003, identified two ways that enterprises attained international status by either starting as a global company or using multiple market entry modes simultaneously (ibid). Surprisingly he also identifies a study that found the use of theoretical models in peer-reviewed articles was evident in only 18% of them (32 out of 179 papers) (ibid, p.557). His research revealed that, despite its age, the internationalisation framework still held, some 34 years since its identification by Johnson and Vahlne in 1977 (ibid, p.560), although it is qualified by indicating that some of the underlying assumptions had changed, with new ideas being added based on other theories and models which, Kaarna claims, have enhanced â€Å"the understanding of [the] accelerated internationalisation phenomenon† (ibid). Other aspects affecting the increasing extent and pace of globalisation, are increasing amounts of i nvestment from companies seeking to set up operations in different countries. Restrictions are being reduced and/or removed to facilitate this, increasing the abilities of nations to import and export required goods and services (Hill, 2011, pp.12-13). Trade barriers have also been progressively reduced, although there are often threats of imposing tariffs and quotas when nations disagree with policies and approaches of other nations, resulting