We model a contract by which a firm engages a Designated Market Maker (DMM) to provide more liquidity than would be supplied in a competitive market. The DMM contract increases trading volume, and enhances allocative efficiency, price discovery and firm value. The model predicts that DMM contracts will be most valuable for (i) firms characterized by substantial information asymmetries as well as greater uncertainty regarding asset value, and (ii) firms whose real investment decisions are better informed by improved price discovery, i.e. small, young, growth firms. Our analysis indicates that contracts between listed firms and DMMs, which are currently prohibited in the U.S., can represent a market solution to a market imperfection.