Les Cahiers de Recherche - HEC Paris
Alessandro CITANNA, Heracles M. POLEMARCHAKIS and M. TIRELLI
The Taxation of Trades in assets
Abstract: When the asset market is incomplete, there typically exist
taxes on trades in assets and a redistribution of revenue in the asset
market that are Pareto improving.
The policy is anonymous, it
economizes on complexity, and it results in ex post Pareto optimal
allocations, it is publicly announced before markets open, thus fully and
correctly anticipated by traders, it does not require that financial
markets be shut down, and it does not modify the asset market structure. As
such, it improves over previously proposed constrained interventions.
Keywords: taxes; incomplete asset market; equilibrium; pareto; improvement; (follow links to similar papers)
JEL-Codes: D52; D60; H20; (follow links to similar papers)
19 pages, December 1, 2000
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