By Kelvin Tai - Economics and Management Student @ Harris Manchester College, Oxford
You may be most familiar with English auctions, often portrayed in popular media where bidders shout out increasing bids until the auctioneer completes his “going once, going twice, gone” routine. One can see how the price may vary based on the willingness to pay. However, there are many variants of auctions.
One type is the Dutch auction. Instead of increasing bids, the Dutch auction works by having a high asking price and the auctioneer decreasing the amount until someone bids for it. It’s not difficult to see why this could extract more consumer surplus than the English v