The way informed traders use their privileged information affects the properties of asset prices. This paper compares the market efficiency of the two most widely adopted informed trading paradigms: the Grossman-Stiglitz-style and the Kyle-style, in a unified three-period framework. The...

We derive an equilibrium price that converges to be strong-form informationally efficient in the original Grossman-Stiglitz model (1980). Specifically, we show that when the private signal converges to be perfect or traders converge to be risk neutral, there exists a unique overall equilibrium...