This is the gov world though, where the interesting information is things like your address book, your emails (the content as well as the senders/recipients), your private keys and passwords, etc. etc. Client sides provide direct access to those things (or at least, a means of obtaining them).
There are very few governments that care about what is on your company file server or in your company databases. (Ignoring the elephant in the room on that one.)
Law enforcement agencies keep huge Access databases of the contacts they extract from cell phones taken from criminals. They share this intel with each other via email (I know, I know...). They can discover a great deal about who is involved in an activity and where they are on the totem pole from just this data. Its even possible to identify people by correlating the content of the "name" field and using the phone number is a unique ID. Criminals tend to have poor OPSEC.
It just means that the seller is incentivized to minimize the number of people that know about the vulnerability. Which is effectively what "exclusivity" actually means, at least in this case.
As an additional point, if either side becomes known as a bad actor in the market, they will severely limit their ability to operate. There is some short term incentive to be dishonest (more money now), but in the long term it removes the ability to earn in the future. Like selling your fishing rod for fish today, tomorrow you'll be hungry again, only now you can't fish. (To butcher a cliche.)
Cydia (the gray market app store) generates over a million dollars a year in revenue. The operation of this store, and thus its revenue stream, is entirely dependent on jailbroken iOS devices. Thus, there is a business entity with a existential interest in iOS exploits that are easily available to the iOS using community (i.e. the public). Would Cydia pay a quarter million dollars for an exploit to ensure that their customer base continues to exist? (Disclaimer: I'm not affiliated with Cydia in anyway, that revenue figure is from an ex-Apple employee discussing an informal estimate.)
As mentioned elsewhere, generally the payment is spread out over months, contingent on the seller keeping their side of the bargain. And the second query describes the business practices of many defense contractors who act as de facto gatekeepers to government contracts.
On a related note re: client vs. server. Taking a recent incident that was in the news, when the Brits pwned a pro AQ forum. From that vantage point, the best thing they can do is to target the admins, moderators and heavy users -- with client sides. Probably more than one, since it is unlikely that a single exploit would be effective against each of the targets. The valuable intel is going to come off those user's boxes, not off some semi-anonymous VPS shard. Logs of Tor exit nodes, googlebot, and proxies reveal nothing interesting. From a certain perspective, it makes sense that there just isn't much value to be had from servers, and so there's reduced incentive to pay high prices for server exploits.
Not to mention that gaining access to that server would probably be fairly simple given the atrocious security standards of most web hosting companies. CPanel, pilfered ssh key, SQLi, PHP bugs in the forum software, rent a VPS on the same host and LPE... I hardly need to tell _you_ how many alternative (cheap) ways exist to gain access to the server. (And this is assuming that they aren't running their own colo's and web hosts a la http://www.schneier.com/blog/archives/2008/10/clever_counter...)
Given the relative ease of access to servers, the poor quality of intel stored on them, and its no wonder that the market focus is on client sides. Finally, its worth mentioning that most (all?) of the servers with interesting data on them are in the legal jurisdiction of the US (just ask Kimble, ha!). Accessing that data requires a sternly worded letter on official letterhead-- not an exploit.
So, not to detract from either of your' points; but there is another angle to add to the mix.
s/sellers/vendors/ ... lets not forget who created the bugs in the first place, then failed to find and removed them, and finally shipped a dangerously malfunctioning product! (Alien Invaders from Mars -- http://www.antipope.org/charlie/blog-static/2010/12/invaders...)
Consider the possibility that governments can create their own exploits. If they have a large quantity of server side bugs the marginal utility of one more is effectively 0. It is safe to assume that they have existing capabilities in that area. Just mentioning a LAMP stack means SQLi as the most likely vector. No point in paying for someone to run sqlmap for you... ;)
Could you explain your reasoning a bit more? I am not following from "individual invests thousands of hours into their passion; some are compensated for their work by people who value their skills; those individuals are leeches on society". I think there is a step or twenty in there that you could expand.
The more public the market is, the less effective it is. WabiSabiLabi tried (and failed) to create an eBay for exploits years ago. The item of value is the information, not necessarily the code. As such, the more information is provided gratis, the less it is worth overall. In theory, a nice principle, but it is directly opposed to the forces that drive the market.
There are very few governments that care about what is on your company file server or in your company databases. (Ignoring the elephant in the room on that one.)
Law enforcement agencies keep huge Access databases of the contacts they extract from cell phones taken from criminals. They share this intel with each other via email (I know, I know...). They can discover a great deal about who is involved in an activity and where they are on the totem pole from just this data. Its even possible to identify people by correlating the content of the "name" field and using the phone number is a unique ID. Criminals tend to have poor OPSEC.