A Dutch auction starts with a high price that drops until an item is sold. It is used for items not expected to fetch a high price or to sell quickly. It can also refer to an online auction where several identical items are sold together.
Dutch auction can refer to two very different processes used in the auction world. Originally, a Dutch auction specifically referred to a type of auction that starts with a high price that keeps dropping until the item is sold. This is the opposite process to regular auctions, where an item starts at a minimum price and bidders fight for it by raising their bids. In a Dutch auction, however, the auctioneer offers the item at a certain price and hopes that someone will agree. If no one does, then he lowers the price and asks again. This continues until one participant says “yes” and thus wins the item. There are no battles for items in a Dutch auction; the first person to accept the offered price wins the item.
A Dutch auction is common when items are not expected to fetch a high price or when something needs to sell quickly. Most auctioneers avoid Dutch auctions because they believe the final price is always lower than in a regular auction. US Customs uses Dutch auctions to dispose of unclaimed items that have been in storage for over a year. Many police auctions are also conducted this way. Since the main objective in both cases is to sell these objects quickly in order to make room for new ones, the lower profits generated are secondary.
Dutch auction can also refer to a type of online auction that has become popular in recent years, especially on eBay. In these auctions, several identical items are offered for sale together, and bidders have the option of purchasing any number of them, from a single unit to any combination they desire. An online Dutch auction gives the seller the opportunity to list items just once rather than having to pay for multiple postings. If there are more items than bidders, the items will be sold at the lowest price. When there are more bidders than items, the last bid will increase the item’s original price.
Asset Smart.
Protect your devices with Threat Protection by NordVPN
