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Blockage Rule

What does Blockage Rule mean in American Law?

The definition of Blockage Rule in the law of the United States, as defined by the lexicographer Arthur Leff in his legal dictionary is:

A rule applied in the valuation of corporate stock, especially for gift and estate tax purposes, which permits large blocks of stock to be valued at some substantial discount from their apparent market value. The theory is that if a large block of stock were in fact put on the market, that fact alone would depress the market price (which depends, of course, on the relation between supply and demand), with the extent of the depression dependent on how large a proportion of the total the block comprises. But [a] block large enough to confer control of the company on the buyer may actually fetch a premium price.