1. An iterative auction format in which the auctioneer starts the bidding at a high price, with each successive bid one bid increment lower than the last. The first bidder wins the auction, paying the last announced price at the time of the bid. Also known as a descending clock auction or open descending price auction.
2. An auction format for selling multiple identical items, based on a clearing price. The auctioneer or issuer of the securities begins at a high initial price, lowering the price incrementally until bids are received and the clearing price is established. Bidders may sometimes submit demand curves rather than a single bid. In this case, each bidder wins the quantity of the item demanded at the clearing price, and paying that amount for each item won. This type of auction is commonly used in the trading of securities, especially U.S. Treasury Department notes and inflation-indexed securities. Also known as a uniform price auction.
Terms, Definitions, and Concepts: Auction, Economy, Finance and Investment, Real Estate
Added: Tue Sep 30 2008