Working Paper: CEPR ID: DP10983
Authors: Helmut Elsinger; Philipp Schmidt-Dengler; Christine Zulehner
Abstract: 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 that increased competition reduced bidder surplus substantially, but less than reduced form estimates would suggest. A significant component of the surplus reduction is due to more aggressive bidding. Counterfactuals establish that as competition increases, concerns regarding auction format play a smaller role.
Keywords: competition; multi-unit auctions; structural estimation; treasury auctions
JEL Codes: D43; D44
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased competition (L13) | More aggressive bidding behavior (D44) |
| Changing auction format to uniform auction (D44) | Increased government revenue before EU accession (H27) |
| EU accession (F15) | Increased number of bidders (D44) |
| Difference-in-difference estimates (C22) | Larger effect of EU accession on yields (O52) |
| Increased competition due to Austria's EU accession (F15) | Reduction in bidder surplus (D44) |
| Increased number of bidders (D44) | Reduction in bidder surplus (D44) |