We provide a possible explanation for the empirical puzzle that mergers often reduce profits, but raise share prices. If being an "insider" is better than being an "outsider", firms may merge to preempt their partner merging with a rival. The insiders' stock market value is increased, since the...

We quantify the competitive effects of liberalizing the selective and exclusive distribution system in the European car market, based on a model of oligopoly pricing with differentiated products. We consider two possible competitive effects from liberalization: (i) the creation of international...