Supersedes Working Paper 13-20 — Subsidizing Price Discovery.

They find a fundamental tension in maximizing welfare: While some intervention is required to restore trading, too much intervention depletes trade of its informational content. The authors characterize the optimal policy that balances these two considerations and explore how it depends on features of the environment. Their model can be used to study a program introduced in 2009 to restore information production in the market for legacy assets.