How the Dutch auction works

When we talk about auctions , we all imagine the typical American living room, in which we find a man exposing a painting and another waving a hammer. And down dozens of people in jackets doing bids. It is true that there are many auctions that can be this way, and many others that cannot, including the Dutch auction. To understand better how they can be carried out, at we explain how the Dutch auction works.

You may also be interested in: How the American auction works

What is the Dutch auction

In the Dutch auction the claimants do not bid directly, but the one who offers the item is the one who offers a maximum bid, normally being a very high price , which decreases until someone decides to accept it.

In the event that no one accepts, the minimum reserve price is reached , which is the minimum at which the owner of the item plans to offer it.

Unlike the American auction, nobody loses their money, only the one who buys the item pays.

How and when the Dutch auction is used

Normally this type of auction is used when you have a large number of objects to auction, and you want to sell them quickly , since you do not have to listen to the bids of all the applicants, but only that of the bidder.

The item usually ends up with a lower price in this type of auction than in others. It is used for a wide variety of sales , from large amounts of public debt that a country wants to put on the market to raw materials.

The procedure is as follows:

  • Item holder offers maximum bid
  • This bid decreases in the event that no plaintiff accepts it.
  • Someone accepts the bid and pays the agreed amount for the item
  • In case no one accepts it, the holder offers a minimum bid, which may or may not be accepted

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