Auction fever. Real estates auctions in 17th and 18th century Paris

Auction markets for immovable property were widespread in early modern Europe, but much less known than the over-the-counter (OTC) market processed by notaries, where most sales were recorded. In comparison with OTC sales, auction sales are designed to produce the highest possible price for a property. However, in 17th and 18"' century France, auction sales of immovable property (either real, like houses or financial, like perpetuities), either from voluntary or compulsory procedures, resulted in market prices which on average were distinctively lower than their OTC counterparts. The present paper accounts for this phenomenon by showing that cost and duration of the auction process, as well as its very uncertain outcome, contributed to price moderation as bidders ex ante added these costs to the buying price, when they did not prefer to buy outright OTC. Moreover, auction sale system, which has been organized to provide optimal publicity and competition, was somewhat crippled by the families' right on the property that had been seized: transfer of ownership might be blocked or cancelled, even a posteriori.