A Dutch auction is a descending-price format: the auctioneer starts at a high price and lowers it incrementally until a bidder accepts. The first person to call out “mine” (or click “buy”) wins at that price. Named after the Dutch tulip and flower markets, where the format originated.
Dutch auctions favor speed — a tulip auction might run hundreds of lots per hour, far faster than a traditional English auction. The format is rare in the US except for specialized contexts: wholesale produce, government securities issuance, and some IPOs. Bidders need real-time decision-making because hesitating means a competitor wins at a higher price than you’d have paid.
The Aalsmeer flower auction in the Netherlands — the largest flower auction in the world — still runs Dutch-format. A giant electronic clock ticks down the price, and buyers press a button when they’re willing to commit. Volumes are staggering: 12,000 daily transactions, 20 million flowers per day. The Dutch format is also used in some Treasury bond issuances, where the lowest-yield bid that fills the issuance becomes the price for everyone — an interesting hybrid of Dutch mechanics and uniform pricing.