Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/141995
Authors: 
Monostori, Zoltán
Year of Publication: 
2014
Series/Report no.: 
MNB Occasional Papers 111
Abstract: 
The purpose of this paper is to compare the two auction techniques (discriminatory and uniform-price auctions) most commonly used for the sale of securities. Literature tends to analyze methods from the aspect of the expected revenue from the auction. Theoretical models arrive at different rankings for expected revenue; however, they do reveal the relationship between the bids submitted and the auction technique. These results are confirmed both by 'laborator' experiments and the empirical evidence of real-world auctions. The latter may also provide a robust answer to the question of expected revenue; the uniform-price format coming out as the more beneficial for the Treasury. Still, at present the global majority of issuers of government bonds use the discriminatory-price format and central bank instruments also tend to be sold in this format. This is because issuers may have considerations other than expected revenue.
Subjects: 
auction
central bank auctions
treasury auctions
discriminatory auctions
uniform-price auctions
JEL: 
C78
D44
D53
D82
H63
Document Type: 
Working Paper

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