While it is well established that diversifying acquisitions by large, cash-rich firms destroy shareholder wealth, we document positive abnormal returns to such acquisitions in the tobacco industry. We show that these abnormal returns are associated with proxies for lower expected expropriation...

We consider a monopolist selling durable goods to consumers with unit demands but different preferences for quality. The seller can offer items of different quality at the same time to induce buyers to self-select, as in Mussa-Rosen (1978), but is not artificially constrained to offer only one...