In a continuous-time Kyle model, a non-fiduciary market maker who adds a fee proportional to order flow can earn expected profits exceeding those of a perfectly informed insider, while increasing price volatility.
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Strategic Insider Trading Equilibrium with a Non-fiduciary Market Maker
In a continuous-time Kyle model, a non-fiduciary market maker who adds a fee proportional to order flow can earn expected profits exceeding those of a perfectly informed insider, while increasing price volatility.