Nope, nothing unethical about bidding on someone else's item. Why would there be? High bidder gets it, just as in your auction. Say the guy loses out to a sniper in the closing seconds of your auction, now do you have the permission to bid against him? You don't owe the bidder in your auction anything but a honest and good transaction in your auction. I believe that most bidders feel this way, but if you're afraid of hacking him off or hurting his feelings, that's another matter, and one that only you can decide.
That's the way it seems from down heah anyways.
Mississippi Dave
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