The Dutch Auction

Primarily used by buyers this is where one party will play 2 or more bidding suppliers against each other to drive the price down. It is usually done on an informal basis and is most effective when the buyer does not tell each bidder what the rival bid was, merely that they have been under-cut and need to reduce their price if they wish to win the business. It is often preceded by the buyer stating that they ‘do not want to get into a Dutch Auction but…’ It is a crude form of Game Theory and is used in transactional situations often for commoditised products or services (Cold or Cool negotiations). The Dutch Auction is not good for building trust.

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