A Dutch auction is the opposite of a traditional auction. The auctioneer begins with a high asking price, which is lowered until the first person accepts the current price.
A Dutch auction initially offers an item at a price in excess of the amount the seller expects to receive. The price lowers in steps until a bidder accepts the current price. That bidder wins the auction and pays that price for the item. For example, a business might auction a used company car at a starting bid of $15,000. If nobody accepts the initial bid, the sellers successively reduce the price in $1,000 increments. When the price reaches $10,000, a particular bidder—who feels that price is acceptable and that someone else will agree, or might bid first if the price goes to $9,000—quickly accepts the bid, and pays $10,000 for the car.
Dutch auctions are a competitive alternative to a traditional auction, in which customers make bids of increasing value until nobody is willing to bid higher.
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