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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Why government bonds are sold by auction and corporate bonds by posted-price selling |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Journal of Financial Intermediation |
| Publisher | Elsevier |
| Geographical Reach | international |
| ISSN | 1042-9573 |
| Volume | 16 |
| Number | 3 |
| Page Range | 343 - 367 |
| Date | 2007 |
| Abstract Text | When information is costly, a seller may wish to prevent prospective buyers from acquiring information, for the cost of information acquisition ultimately is borne by the seller. A seller can achieve the desired prevention through posted-priceselling, by offering prospective buyers a discount. No such prevention is possible in the case of an auction. We establish the result that the seller prefers posted-priceselling when the cost of information acquisition is high andauctions when it is low. We view corporatebonds as an instance of the former case, andgovernmentbonds as an instance of the latter. |
| Digital Object Identifier | 10.1016/j.jfi.2007.03.006 |
| Other Identification Number | merlin-id:3441 |
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| Keywords | Governmentbonds, Corporatebonds, Auctions, Posted-priceselling, Costly information |