>>T. - in your example you're making the assumption that your shill bidder somehow knows the proxy bid amount of the "opponent." Since serious bidding usually occurs in the last minutes - even minute or seconds - it is extremely difficult to "inflate" the bid by running it up to (but not far over) someone's unknown proxy. You'd simply run out of time to execute the bids. And, if you stab at it with a huge bid and end up winning, you and your compatriot have just cost yourselve(s) the listing fee and the commission.<<
First, usually the compatriot is one and the same as the seller (in my example). It can be two different people or two different people where one uses the others' account, etc. I've found the most success just using two accounts.
Here's how you avoid the transaction costs (it's easy and free, which leads to another cheat!):
Say your quote-unquote Compatriot quote-unquote wink wink wins. Too bad. You e-mail the last bidder a nice message: "Hi, the top bidder notified me that he was unable to pay for the item (or didn't want it, yada yada). Rather than create a fuss, I'll send it to you at the last price you bid if you're still interested." If they're interested but suspicious or undecided, throw in shipping or some other freebie.
Which is the next cheat, which is so rampant it's not even a spoiler: Rather than run a dutch auction with, say, 5 widgets, run an auction with 1 widget. More demand creates higher bids. Then write to the losing bidders in descending order, offering them the item with similar "winner didn't want it, do you at your bid?" line. You make tons more than a dutch auction, plus you don't have to pay as many ebay fees! The bottom line is, "Don't leave money on the table".
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