Auction Dictionary
( Bidera Auction help center glossary )

Dutch Auction is a form of multiple item auction. Seller puts a number of identical items for sale at the same time. Buyers bid with the price and the number of items they would like to buy.

Dutch Auctions by their very nature can have multiple winners. All winners pay the same price, which is the price entered by the lowest successful bidder.

If there are more bidders than items, and few bidders have bid the same price, priority is given to the bidder, who entered the bid first.

As an example, Seller A has put up 5 identical pens for sale at starting price $1. Buyer B enters bid of $1 for 1 pen, Buyer C enters bid of 2 pens for $1.50, Buyer D, 1 pen for $2, and finally Buyer E bids last and enters bid of 3 pens for $1. All buyers will end up paying $1, Buyer E will only be able to buy one pen for $1.

In the above example, if Buyer E had entered 3 pens for $1.50, he would have been able to purchase 2 of them for $1.50 (Buyer B losing the auction altoghether). Even if buyer Buyer E had entered 3 pens for $2.50, he would still end up being able to purchase only 2 of them for $1.50

See also Yankee-Dutch Auction, which is different from regular Dutch Auction and avoids some of the bidding problems inherent in regular Dutch Auction.