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While all errors are our own, we thank Rui Esteves, Daniel Klerman, Lee Ohanian, Christoph Trebesch, the editor, three anonymous referees, and numerous seminar participants for comments, and Catherine Feng and Aubrey Clark for excellent research assistance. Further comments are welcome. Pitchford acknowledges the financial support of the Australian Research Council. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

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We model a buyer who wishes to combine objects owned by two separate sellers in order to realize higher value. Sellers are able to avoid entering into negotiations with the buyer, so that the order in which they negotiate is endogenous. Holdout occurs if at least one of the sellers is not present in the first round of negotiations. We demonstrate that complementarity of the buyer’s technology is a necessary condition for equilibrium holdout. Moreover, a rise in complementarity leads to an increased likelihood of holdout, and an increased efficiency loss. Applications include patents, the land assembly problem, and mergers. Copyright Springer-Verlag Berlin/Heidelberg 2004Bargaining model, Delay, Complementarity, Holdout.,