Why government bonds are sold by auction and corporate bonds by posted-price selling

摘要

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.