Partial exclusivity

We investigate the anticompetitive effects of pre-auction negotiations in selling and procurement situations. Assuming (in the selling case) that the seller and an “incumbent” buyer can move before valuations are learnt, we show that they have a joint incentive to arrange for themselves the option of entering into exclusive negotiations after uncertainty is resolved. In equilibrium, an auction takes place with an endogenous probability that depends on the bargaining process. In that auction, the beliefs are asymmetric even when the potential buyers are ex ante symmetric. CREST-ENSAE, 15 bd Gabriel Peri, 92245 Malakoff, France. Please address correspondence to chone@ensae.fr. We thank Giacomo Calzolari, David Martimort, ????? as well as audiences at the CESifo conference in Munich 2016, EARIE in Lisbon 2016, Seminar PSE 2016, Seminar U. Paris Dauphine 2017, Seminar U. Paris Ouest, 2017.