Market Segmentation and the Cost of Capital in a Domestic Market: Evidence from Municipal Bonds
研究美国市政债券市场因州级税收豁免差异导致的市场分割，发现这种分割通过提高收益率和金融中介成本，给发行者和投资者带来显著成本。
We study the implications of market segmentation in a domestic setting, the US municipal bond market. A (state‐level) segmentation of this market emerges from asymmetric tax exemption. Municipal bond investors are exempt from state and local taxes on bonds issued by their own state, but not on bonds issued by other states. We demonstrate that market segmentation imposes significant costs on both issuers and investors in the form of higher yields and higher costs of financial intermediation. Our results provide insight into some well‐documented artifacts of the municipal bond market, such as high yields and the popularity of insurance.