Dutch auction

See also: Auction | Economics

Wikipedia: Auction (http://en.wikipedia.org/wiki/Auction)

A type of descending-bid auction. In the Dutch auction the auctioneer sets a (usually high) price. If there is not a buyer the price is lowered until a bidder accepts the price the auctioneer sets. The bidder pays the set price to the auctioneer; the auctioneer gives the item to the bidder.

All bids are done in public. When multiple items are sold everyone pays the same price as the lowest succesful bidder. All items have to be identical though.

There seems to be a consensus between economics this leads to less revenue than the English auction, Sealed first-price auction or the Sealed second-price auction. On the positive side, this method usually means items are sold fast. Because of this it is a popular auction type when bulk is to be sold.


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