Competition in Treasury Auctions

We investigate the role of competition on the outcome of Austrian Treasury auctions. Austria’s EU accession led to an increase in the number of banks participating in treasury auctions. We use structural estimates of bidders’ private values to examine the effect of increased competition on auction p...

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Bibliographic Details
Published in:	American economic journal. Microeconomics 2019-02, Vol.11 (1), p.157-184
Main Authors:	Elsinger, Helmut, Schmidt-Dengler, Philipp, Zulehner, Christine
Format:	Article
Language:	eng
Subjects:	Bond issues EU membership
Online Access:	Get full text
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Summary:	We investigate the role of competition on the outcome of Austrian Treasury auctions. Austria’s EU accession led to an increase in the number of banks participating in treasury auctions. We use structural estimates of bidders’ private values to examine the effect of increased competition on auction performance. We find robust evidence that bidders’ surplus dropped sharply after EU accession, but less than reduced form estimates would suggest. The difference can be explained by reduced form estimates not taking into account the increase in valuations upon EU accession.
ISSN:	1945-7669 1945-7685