Competition and the Cost of Capital Revisited: Special Authorities and Underwriters in the Market for Tax-emempt Hospital Bonds
AbstractWe explore the effects of two kinds of competition on the cost of capital in the tax-exempt bond market: (1) competition amongst underwriters and (2) competition amongst issuers (most of which are quasi-public special authorities sanctioned by state governments). The first kind of competition--essentially, competitive versus negotiated bidding processes--has received considerable attention in the literature. The second kind of competition, the number of potential issuers available to a beneficiary of a bond issue, has received far less attention and is related to the level of decentralization of the market for issuing bonds. Studies of the effects of competition have often used small samples of bond issues--often in one or a few states and for one or a few years--to reach their conclusions. Using a national database covering fourteen years, we find that both kinds of competition lower interest rates, at least in the hospital sector.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7356.
Date of creation: Sep 1999
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Publication status: published as A. Gershberg, M. Grossman & F. Goldman "Competition and the Cost of Capital Revisited: Special Authorities and Underwriters in the Market for Tax-exempt Hospital Bonds," National Tax Journal, Vol. 54, No. 2, June 2001: 255-280.
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Other versions of this item:
- Gershberg, Alec Ian & Grossman, Michael, 2001. "Competition and the Cost of Capital Revisited: Special Authorities and Underwriters in the Market for Tax-exempt Hospital Bonds," National Tax Journal, National Tax Association, vol. 54(n. 2), pages 255-80, June.
- I10 - Health, Education, and Welfare - - Health - - - General
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-11-08 (All new papers)
- NEP-CFN-1999-11-08 (Corporate Finance)
- NEP-PUB-1999-11-15 (Public Finance)
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