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New study shows how capital gains tax can improve market efficiency.

SSRN Electronic Journal
Prices and Allocations in a Trading Market with Multi-Dimensional Signals
Tibor Heumann

Paper Summary

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The article explores how trading markets work when agents have different signals about the value of assets. They found that an equilibrium exists in these markets, and under certain conditions, this equilibrium is efficient in terms of prices and allocations. By implementing a capital gains tax, it is possible to achieve a more efficient outcome in these markets.