An auction is basically a public sale wherein any object is sold to the highest bidder. It can be defined as a process of purchasing and selling things by offering them up for bid, taking bids and selling the things out to the highest bidder. This is what is generally the case. However, a sale to the lowest bidder may also take place, in cases where land is sold for non-payment of taxes to anyone willing to take it for the shortest term; or where a contract is offered to an individual or party willing to take it for the shortest term; or where a contract is offered to an individual or party willing to perform it at the lowest price. Such cases too seem to fairly come under the purview of the term ‘auction’.

The benefits of auction are many. Some of the significant advantages are:
- The auctioned item fetches the highest price in the given situation. Thus, in a way there is the maximization or optimization of profit.
- At an auction the goods are almost certainly disposed off after bidding by their sale to the highest bidder. Hence, this serves as the right podium for disposing or selling out of accumulated goods. Otherwise, business could have become stagnant due to the stocking of these goods. Certain items could also have perished (in case of perishable goods) or expired if not sold out in time.
- In case of auctioning a variety of articles may come up for sale, which may not be otherwise available in the market. The buyer can get quite surprised by looking at a treasure trove of antique articles available at an auction.
- An auction can also be considered as a method for estimating the value of certain commodities which have hitherto undetermined or variable prices.