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This paper studies the velocity estimation performance for multiple-input multiple-output (MIMO) radar with widely spaced antennas. We derive the Cramer-Rao bound (CRB) for velocity estimation and study the optimized system/configuration design based on CRB. General results are presented for an extended target with reflectivity varying with look angle. Then detailed analysis is provided for a simplified case, assuming an isotropic scatterer. For given transmitted signals, optimal antenna placement is analyzed in the sense of minimizing the CRB of the velocity estimation error. We show that when all antennas are located at approximately the same distance from the target, symmetrical placement is optimal and the relative position of transmitters and receivers can be arbitrary under the orthogonal received signal assumption. In this case, it is also shown that for MIMO radar with optimal placement, velocity estimation accuracy can be improved by increasing either the signal time duration or the product of the number of transmit and receive antennas.