We report a comprehensive study of the paradigmatic quasi-1D compound(TaSe4)2I performed by means of angle-resolved photoemission spectroscopy(ARPES) and first-principles electronic structure calculations. We find it tobe a zero-gap semiconductor in the non-distorted structure, with non-negligibleinterchain coupling. Theory and experiment support a Peierls-like scenario forthe CDW formation below T_CDW = 263 K, where the incommensurability is a directconsequence of the finite interchain coupling. The formation of small polarons,strongly suggested by the ARPES data, explains the puzzlingsemiconductor-to-semiconductor transition observed in transport at T_CDW.
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