That's exactly how it's done on eBay, only the price spread is much wider, to make more profit for eBay itself (commissions).
on ebay, the reserve price is a closely guarded secret. If I have gamed the system and found that a seller’s reserve price is $1,000 and I know the deal will be sealed the moment that price is reached, I’m not going to bid $1,100. In this way, I have used my priveleged information to screw the seller out of $100. It’s not a perfect analogy but it’s pretty close.