Competition in Austrian Treasury Auctions

We investigate the role of competition on the outcome of Austrian Treasury auctions. EU accession by Austria provides a “natural experiment” causing an exogenous increase in the number of bidders in Treasury Auctions. Difference-in-difference estimates suggest that the increased number in bidders caused a significant drop in the yields Austria had to pay for newly issued debt. We use structural estimates of bidders’ private values to examine the effect of increased competition on auction revenue. We compare bidder surplus before and after the auction. We find a small effect on the the surplus earned by bidders as a result of increased competition. We wish to thank the Austrian Federal Financing Agency (OeBFA) and the Oesterreichische Kontrollbank (OeKB) for providing the necessary data. Paul Kocher, Maria Kucera and Erich Weiss provided helpful comments. The views expressed are entirely those of the authors and do not necessarily represent those of Oesterreichische Nationalbank. Oesterreichische Nationalbank, email: [email protected] University of Mannheim, email: [email protected] Johannes Kepler University Linz and Austrian Institute of Economic Research, email: [email protected]