Tax Advantages and Imperfect Competition in Auctions for Municipal Bonds
研究了市政债券的税收优势与拍卖市场结构如何相互作用，影响投标人信息租金和地方政府借贷成本，发现税收优势降低3个百分点可使借贷成本下降9-10%，并评估了奥巴马和特朗普政府限制税收优势政策的效率。
Abstract We study the interaction between tax advantages for municipal bonds and the market structure of auctions for these bonds. We show that this interaction can limit a bidder’s ability to extract information rents and is a crucial determinant of state and local governments’ borrowing costs. Reduced-form estimates show that increasing the tax advantage by 3 pp lowers mean borrowing costs by 9–10$\%$. We estimate a structural auction model to measure markups and to illustrate and quantify how the interaction between tax policy and bidder strategic behaviour determines the impact of tax advantages on municipal borrowing costs. We use the estimated model to evaluate the efficiency of Obama and Trump administration policies that limit the tax advantage for municipal bonds. Because reductions in the tax advantage inflate bidder markups and depress competition, the resulting increase in municipal borrowing costs more than offsets the tax savings to the government. Finally, we use the model to analyse a recent non-tax regulation that affects entry into municipal bond auctions.