Reverse auctions

Question

Reverse auctions

Quizplus · Accepted Answer

Reverse auctions are typically used by firms to identify customers with elastic demand curves. In a reverse auction, firms offer a product or service and customers bid on how much they are willing to pay for it. This allows the firm to determine the highest price a customer is willing to pay, which can be used to inform pricing strategies and identify customer segments with higher or lower price sensitivity. Reverse auctions do not require customers to fly at unpopular times, nor are they typically used to prevent high-paying customers from spending too little money.

Reverse Auctions