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The taxation of trades in assets

  • CITANNA, Alessandro
  • POLEMARCHAKIS, Herakles M.
  • TIRELLI, Mario

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.

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File URL: http://alfresco.uclouvain.be/alfresco/download/attach/workspace/SpacesStore/279b22ea-a14a-4ad5-87b5-95c704393111/coredp_2001_17.pdf
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2001017.

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Date of creation: 00 Apr 2001
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Handle: RePEc:cor:louvco:2001017
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  1. David Cass & Alessandro Citanna, 1998. "Pareto Improving Financial Innovation in Incomplete Markets," Post-Print hal-00479286, HAL.
  2. Mario Tirelli, 2003. "Income taxation when markets are incomplete," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 26(2), pages 97-128, November.
  3. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production II: Tax Rules," American Economic Review, American Economic Association, vol. 61(3), pages 261-78, June.
  4. Guesnerie Roger, 1976. "On the direction of tax reform," CEPREMAP Working Papers (Couverture Orange) 7603, CEPREMAP.
  5. HERINGS, Jean-Jacques & POLEMARCHAKIS, Heracles, 1998. "Pareto improving price regulation when the asset market is incomplete," CORE Discussion Papers 1998041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. DEBREU, Gérard, . "Economies with a finite set of equilibria," CORE Discussion Papers RP 67, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Hart, Oliver D., 1975. "On the optimality of equilibrium when the market structure is incomplete," Journal of Economic Theory, Elsevier, vol. 11(3), pages 418-443, December.
  8. Mirrlees, J. A., 1976. "Optimal tax theory : A synthesis," Journal of Public Economics, Elsevier, vol. 6(4), pages 327-358, November.
  9. TIRELLI, Mario, 2000. "Constrained suboptimality and financial innovation in GEI with a single commodity," CORE Discussion Papers 2000019, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Guesnerie, Roger, 1979. "General statements on second best pareto optimality," Journal of Mathematical Economics, Elsevier, vol. 6(2), pages 169-194, July.
  11. Dow, J. & Rahi, R., 1997. "Should Speculators be Taxed?," Economics Working Papers eco97/21, European University Institute.
  12. James Tobin, 1978. "A Proposal for International Monetary Reform," Cowles Foundation Discussion Papers 506, Cowles Foundation for Research in Economics, Yale University.
  13. Atsushi Kajii & Antonio Villanacci & Alessandro Citanna, 1998. "Constrained suboptimality in incomplete markets: a general approach and two applications," Economic Theory, Society for the Advancement of Economic Theory (SAET), vol. 11(3), pages 495-521.
  14. Alberto Bisin & John Geanakoplos & Piero Gottardi & Enrico Minelli & Herakles Polemarchakis, 2010. "Markets and contracts," Economics Working Papers ECO2010/29, European University Institute.
    • Alberto Bisin & John Geanakoplos & Piero Gottardi & Enrico Minelli & Heracles Polemarchakis, 2009. "Markets and Contracts," Working Papers 0915, University of Brescia, Department of Economics.
  15. Kajii Atsushi, 1994. "Anonymity and Optimality of Competitive Equilibria when Markets Are Incomplete," Journal of Economic Theory, Elsevier, vol. 64(1), pages 115-129, October.
  16. Auerbach, Alan J., 1985. "The theory of excess burden and optimal taxation," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 2, pages 61-127 Elsevier.
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