"Why Do Sellers (Usually) Prefer Auctions?" Jeremy Bulow Graduate School of Business, Stanford University, Stanford, USA and and Paul Klemperer Nuffield College, University of Oxford, Oxford OX1 1NF United Kingdom Abstract We compare the most common methods for selling a company or other asset when participation is costly: a simple simultaneous auction, and a sequential process in which potential buyers decide in turn whether or not to enter the bidding. The sequential process is always more efficient. But pre-emptive bids transfer surplus from the seller to buyers. Because the auction is more conducive to entry - precisely because of its inefficiency - it usually generates higher expected revenue. We also discuss the effects of lock-ups, matching rights, break-up fees (as in takeover battles), entry subsidies, etc. Keywords: Auctions, jump bidding, sequential sales, procurement, entry JEL Classification Numbers: D44 Auctions; G34 Mergers & Acquisitions; L13 Oligopoly & Imperfect Markets.