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In a Dutch auction, the product being offered is at first offered at a extremely big price, well in excess of the total the seller wants to get. Bids are not hidden, as they are in some types of such auctions. The price is lowered in decrements until a bidder will agree to buy for the present price. That bidder wins the auction and pays that price for the product.
For instance, assume a business is auctioning [url=http://www.achbanker.com/home.php]www.achbanker.com/home.php[/url] off a second-hand company car: the bidding may start at $35,000. The bidders will wait as the price is successively reduced to $34,000, $33,000, $32,000, $31,000, $30,000, [url=http://www.mansmanifesto.fr/category/doudoune-moncler/‎]doudoune moncler[/url] $29000, $28,000 ,$27,000, $26,000, $25,000, $24,000, $23,000, $22000, $21,000 $20,000. As soon as the price reaches $20,000, Bidder A decides to agree to that price and, because he is the [url=http://www.mxitcms.com/tiffany/]tiffany outlet[/url] first bidder to do so, wins the auction and has to pay $20,000 for the car.
There is some chaos over terminology: a few financial commentators and some third-party auction sites use the term "Dutch auction" to refer to second-price auctions, which are totally [url=http://www.1855sacramento.com/moncler.php]moncler outlet[/url] different from Dutch auctions: in a second-price auction, the winner pays the amount bid either by the lowest winning bidder or by the highest losing bidder.
Dutch auctions are an alternative [url=http://www.hollisterhanesmorgan.co.uk]hollister[/url] to the more traditional type of auction. The descending-price structure of these auctions increases competition among bidders and forces bidders to act quickly.
Although the above model may build it look like [url=http://www.vivid-host.com/barbour.htm]barbour uk[/url] the seller can be losing money in a Dutch auction, the reality is that they usually make more than they would with a more conventional ascending-price auction. With [url=http://www.mquin.com/giuseppezanotti.php]giuseppe zanotti pas cher[/url] an ascending-price auction, the bidders do increase the price but seldom will they increase above the item's real price. They have no motive to operate quick [url=http://www.hollisterhanesmorgan.co.uk]hollister uk[/url] because they know exactly when the auction will finish, and [url=http://www.thehygienerevolution.com/barbour.php]barbour[/url] they be able to always sneak in at the last second with a slightly higher bid. In a Dutch auction, however, bidders must take action fast because they have no idea when the auction may be over. So even though the price is being lowered instead of increased, bidders will end up paying at or even above the item's price.
One of the only problems with Dutch auctions has nothing to do with the auction logic itself but with a common area of confusion. The financial world and some third-party auction sites use the term ?Dutch auction? when they refer to second price auctions. In truth, there is a huge difference between the two types of auctions. Second-price auctions are auctions in which the winners pays either the price of the lowest winning bidder or the price of the highest losing bidder. The confusion in the terms can be problematic for individuals interested in getting involved in either type of auction, so it is important to clarify which type of logic will be used before participating. Depending on what persons have to sell and how much money they expect to make as a result of a successful auction, Dutch auctions can be an perfect option to more traditionally used approaches. The descending-price formation of these auctions raises fight among bidders and makes acting quick a requirement. Bidders just need to be sure that they are participating in a real Dutch auction, not a misnamed [url=http://www.maximoupgrade.com/hot.php]hollister[/url] second price auction prior to getting started.
Dutch Auction Prologue
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Submitted : 2011-06-14 [url=http://www.mxitcms.com/abercrombie/]abercrombie[/url] 00:00:00Word Count : 538Popularity: Not RatedTags: Dutch auction, dutch auction script, dutch auction software
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