It is occasionally observed that auctions are designed to exclude the participation of final consumers. Resellers are the only participants in these auctions. This behavior is sometimes rationalized on the basis of transaction costs: it is cheaper to deal with a small group of individuals on a...

This paper endogenizes exclusive dealing through a distribution channel in auction markets. In particular, it is demonstrated that a seller prefers to exclude final consumers and sell only to re-sellers when these resellers can gain access, at a cost, to a sufficiently bigger market than the...