Dutch Auction

Description of Dutch Auction. Explanation.

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Definition Dutch Auction. Description.

A Dutch Auction is a method of selling and buying whereby a seller has multiple, identical items listed for bidding and the price is gradually lowered until it meets an acceptable level to enough buyers for the entire offering to be sold.

This type of auction is convenient when it is important to auction goods quickly, since a sale never requires more than one bid. The Dutch auction is named for its best known example, the Dutch flower auctions.

In corporate finance, the method is an interesting alternative to the traditional negotiated pricing process used by underwriters to set IPO prices. The method was successfully used by Google for its 2004 Initial Public Offering.

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End of description Dutch Auction. An explanation.