I just had to respond because I, too, initially had that concern: what if everyone starts to snipe? But when you think about it, so what? If literally every Ebay bidder sniped, then no one could see each other's bids until seconds before an auction ends (leaving it impossible to respond with a new bid). When you think about it, that's no different than a "sealed bid" auction, where everyone submits their highest bid in a sealed envelope and then the highest bidder is revealed after the auction deadline. And that's EXACTLY what the true benefit of sniping is - to create a sealed bid scenario where no one can react to each other's bids - removing the emotionally charged situation where two or more passionate bidders cause the price to over-escalate.
I hear all the time from sellers how SO many high bidders don't honor their commitment to purchase. Why is that? Probably because they got emotionally caught up in a bidding war - and ended up having tremendous buyers remorse after the auction closed and they realized they bid too high due to the emotion of the bidding war.
If this is true, then isn't it likely that if everyone sniped, it would significantly reduce the number of buyers who back out or otherwise don't honor their winning bids? So isn't it then possible to argue that while sniping may slightly reduce the average high bid price, that could well be offset by the significantly reduction of delinquint winners who don't pay up??
Just my theory.