Competition and the Cost of Capital Revisited: Special Authorities and Underwriters in the Market for Tax-exempt Hospital Bonds
We explore the effects of two kinds of competition on the cost of capital in the tax-exempt bond market: (1) competition among underwriters and (2) competition among issuers (mostly quasi-government special authorities). The first kind of competition--competitive versus negotiated bidding processes--has received considerable previous attention. The second kind of competition has received far less attention and is related to the level of decentralization of the market for issuing bonds. Using a national database covering 14 years, we find that both kinds of competition lower interest rates, at least in the hospital sector.
Volume (Year): 54 (2001)
Issue (Month): n. 2 (June)
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- Kessel, Reuben, 1971. "A Study of the Effects of Competition in the Tax-exempt Bond Market," Journal of Political Economy, University of Chicago Press, vol. 79(4), pages 706-38, July-Aug..
- Becker, Gary S & Murphy, Kevin M, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, MIT Press, vol. 108(4), pages 941-64, November.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, June.
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