Dutch Auction

A Dutch auction is a type of auction wherein the seller has more than one of the products for sale. An example might be the seller with half dozen pants (all identical) or a set of cartridges. Even though   many of the sellers in the Dutch auctions are small business which wants to move several quantities of an item, you would also find some people with many like items to sell.

In the Dutch auction, the seller indicates both the number of items and the minimum bid available in the auctions. In a normal auction, the bidders bid at or above that minimum for the product- even though, in a Dutch auction, bidders could specify a particular quantity which they are interested in buying.  While you are bidding in the Dutch auction, you should not only have to place your bid, however also you have to specify how many products or items you would like to purchase. You enter the desired amount in the Quantity box in the Take Auction. Determining who wins the Dutch auction is a little different from determining who wins a normal auction. In a Dutch auction, the highest bidders purchase the items, but all buyers pay only the amount that matches the lowest successful bid.

Let’s take an example of the following Dutch auction.

For instance, if a company is auctioning off a used business machine the bidding might begin at 20, 000 dollars.   The bidders would wait when the price is reduced to 19,000 dollars to 18, 000 dollars to 17,000 dollars to 16,000 dollars and to 15,000 dollars. As the bidding reaches 15,000 dollars, Bidder A decides to accept that rate and since he is the first bidder to do so, therefore he is considered as the winner and he has to pay 15,000 dollars for the used business or company machine.

Questionnaire:

• What is Dutch auction?
• Give an example of Dutch auction.