Theory of auctions
The most stunning auction was held on March 28, 193. Pre-pretorians killed Emperor Pertinax, and then put up for auction not much, but the whole of the Roman Empire. The lucky man was Didijus Julian, he paid the most and bought the Roman Empire for 25,000 sesterces - five annual salaries per each of 10,000 Praetorians.
To win at the auction, he had to borrow money, but they were sufficient only for 66 days, then they killed him.
Why auctions are needed
Auctions are needed for the implementation of licenses by the state for the extraction of minerals, extraction of biological resources.
The problem here is that many groups are trying to seize power or influence the decision-making on the distribution of various quotas and licenses in order to make their purchase cheaper. The scheme is simple to the limit. As soon as the financial group achieves success, it immediately invests in political capital, bribes politicians and / or buys posts, pushing its people.
Then, the controlled politicians sell quotas for the extraction of bioresources and licenses for the extraction of minerals to "their" people at a low price. As a result, income from rent goes not to the budget and is not spent on the public good, but with the help of corruption schemes settle in the pockets of oligarchs and officials. One way to stop attempts to redistribute rental income in favor of a few is an auction.
When a lot of competing groups come to bargain for resources, the probability of collusion and corruption is sharply reduced. The second problem of any state is getting rid of state property due to the extreme inefficiency of its management.
Wherever state property appears, managers immediately come up converting state property into personal property. There is a hidden privatization of income and an open socialization of losses. A reliable means of stopping the milking of the budget is the change of state administration into a private one.
Why choose an effective owner who can manage property. The auction on the privatization of state property is just a tool for changing the management system to increase the effective use of resources.
Criticism of auctions
The most amusing is the criticism of auctions from all sides, and the ears of corrupt politicians and oligarchs are coming from everywhere.
The first claim to auctions is an accusation of preliminary collusion and distribution of lots between auction participants. I myself was a participant of many auctions, along with a desperate trade I saw and participated in various conspiracies.
The funny thing is that it is an open auction through shouting out the price and hammer blow is very vulnerable. In this case, economic science came up with an auction through envelopes. A lot of companies seal their offers in envelopes that are opened at the same time and wins the one who offered a greater price or less in case of negative auctions.
Since large companies, which tend to be favorites at auctions, do not have information about the offers of other companies, especially medium and small, they are forced to give a fair price. And society benefits from the sale of bioresources and minerals through auctions.
The second layer of criticism of auctions is aimed at the problem of credit borrowing and weak accounting for financial losses in the extraction of bioresources and minerals. The company takes money to win the auction, it buys a quota very high, for example, to catch fish, but it can not extract it more efficiently than its competitors.
Then the company goes bankrupt, people lose their jobs, which damages the whole society, and the quota remains unclaimed. In this case, economic science responded by offering a secondary sale of quotas and licenses. In this case, a market is created for the sale of permits for the extraction of bioresources and minerals, so that they quickly find more efficient owners and society as a whole wins.
Yes, of course, the auction - this is not the most effective way of finding a more advanced owner, but all other methods are even worse.
The theory of auctions is developing rapidly and I think that living human thought will come up with many more auction mechanisms for a more equitable distribution of quotas, licenses for resources, and more effective ways of privatizing state property will be found.