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Dutch or Multiple Item Auction

A Multiple Item Auction, also know as a Dutch Auction, allows a seller to offer two or more of an identical item for auction. Unlike a standard auction, a dutch auction may have more than one winning bidder.

Each bidder bids on either all, or a select number of the auction items, and indicates the price that they are willing to pay for each item. When the auction ends, all winning bidders will pay the same price for each of their items, whatever the lowest successful bid was. If there are more successful bids than items available, priority goes to the bidders who submitted their bids first.

In order to beat another bidder, a bid must simply have a higher total bid price per item than the other bids, regardless on the number of items that are being bid on.

Here is an example of how this might work:

Seller lists a dutch auction with 5 identical items.

• Bidder “A” placed a bid for 2 items at $20 each.
• Bidder “B” placed a bid for 4 items at $21 each.

The outcome would be:

• Bidder “B” wins 4 items at $20 each
• Bidder “A” wins 1 item at $20 each

The $20 price is because the lowest successful bid was $20. The total items were awarded based upon Bidder B’s willingness to bid a higher dollar amount than Bidder A.

Since Bidder “A” was only awarded “1” item, and his original bid was for “2” items, he has the right to refuse the purchase of that partial order. A winning bidder has the right to refuse paying if they are only awarded a partial number of the items they were bidding on.

Dutch auctions do not allow for a Buy Now option.

Topic ID: 1032 Revision: 1.0
Last update: 2006-04-28 18:56
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