This paper shows that Leland's (1992) results on the positive effects of insider trading on investment are not robust to the introduction of noise in the insider's information. The paper then considers two variations of his model in which the insider is risk neutral (to ensure robustness), and...

This paper defines a concept of efficiency for economies with transactions costs, called Nash efficiency, which characterizes (in the sense of the fundamental theorems of welfare economics) equilibrium allocations in these economies. In particular, it is shown that these allocations are Nash...