TY - JOUR AU - Gershberg,Alec Ian AU - Grossman,Michael AU - Goldman,Fred TI - Competition and the Cost of Capital Revisited: Special Authorities and Underwriters in the Market for Tax-emempt Hospital Bonds JF - National Bureau of Economic Research Working Paper Series VL - No. 7356 PY - 1999 Y2 - September 1999 UR - http://www.nber.org/papers/w7356 L1 - http://www.nber.org/papers/w7356.pdf N1 - Author contact info: Alec I. Gershberg Associate Professor Milano: The New School for Management and Policy 72 Fifth Ave New York, NY 10011 Tel: 212/229-5311x 1412 Fax: 212/229-5404 E-Mail: gersh@newschool.edu Michael Grossman Ph.D. Program in Economics City University of New York Graduate Center 365 Fifth Avenue, 5th Floor New York, NY 10016-4309 Tel: 212/817-7959 Fax: 212/817-1597 E-Mail: mgrossman@gc.cuny.edu Fred Goldman 10 West 66th Street, Apt 6A New York, NY 10023 Tel: 212/595-7110 Fax: 212/579-2977 E-Mail: fred.goldman@gmail.com AB - We explore the effects of two kinds of competition on the cost of capital in the tax-exempt bond market: (1) competition amongst underwriters and (2) competition amongst issuers (most of which are quasi-public special authorities sanctioned by state governments). The first kind of competition--essentially, competitive versus negotiated bidding processes--has received considerable attention in the literature. The second kind of competition, the number of potential issuers available to a beneficiary of a bond issue, has received far less attention and is related to the level of decentralization of the market for issuing bonds. Studies of the effects of competition have often used small samples of bond issues--often in one or a few states and for one or a few years--to reach their conclusions. Using a national database covering fourteen years, we find that both kinds of competition lower interest rates, at least in the hospital sector. ER -