We demonstrate a 'preemptive merger mechanism' which may explain the empirical puzzle why mergers reduce profits, and raise share prices. A merger may confer strong negative externalilties on the firms outside the merger. If being an 'insider' is better than being an 'outsider', firms may merge...

This paper questions whether competition can replace sector-specific regulation of mobile telecommunications. We show that the monopolistic outcome prevails independently of market concentration when access prices are determined in bilateral negotiations. A light-handed regulatory policy can...

This note provides sufficient conditions for immediate agreement in an extensive form model of interdependent bilateral bargaining. The model is suggested by Björnerstedt and Stennek (2006) as a work horse for studying bilateral oligopoly. The key feature of this model is that the firms are...