Competition and the Cost of Capital Revisited: Special Authorities and Underwriters in the Market for Tax-Exempt Hospital Bonds

Alec Ian Gershberg and Michael Grossman

National Tax Journal, 2001, vol. 54, issue 2, 255-80

Abstract: 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.

Date: 2001
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Working Paper: Competition and the Cost of Capital Revisited: Special Authorities and Underwriters in the Market for Tax-emempt Hospital Bonds (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:54:y:2001:i:2:p:255-80

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