Market Bubbles and Wasteful Avoidance: Tax and Regulatory

Written by: Michael R. Powers, David M. Schizer, Martin Shubik Abstract Although short sales make an important contribution to financial markets, this transaction faces legal constraints that do not govern long positions. In evaluating these constraints, other commentators, who are virtually all economists, have not focused rigorously enough on the precise contours of current law. Some short sale constraints are mischaracterized, while others are omitted entirely. Likewise, the existing literature…