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University Behavior under Borrowing Constraints: The Effect of Students' Abilities Distribution

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  • Bralind Kiri

Abstract

The interaction between a university and potential students is examined under the assumptions of financial constraints and of students' abilities following the pattern of a triangular distribution. Subsequently, a comparative statics analysis in terms of welfare and vectors composed of three components – namely quality, tuition fee and ability threshold – is provided. Results suggest that the mode of the distribution is an intrinsic part of equilibria, and that a human capital maximizing university makes additional efforts in terms of pricing and non-pricing strategies in order to alleviate the inconveniences arising due to financial constraints and non-uniformity in the distribution of students' abilities. JEL Codes - D42; H42; I21; I22

Suggested Citation

  • Bralind Kiri, 2021. "University Behavior under Borrowing Constraints: The Effect of Students' Abilities Distribution," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 68(2), pages 249-262, June.
    • Handle: RePEc:aic:saebjn:v:68:y:2021:i:2:p:249-262:n:207
    DOI: 10.47743/saeb-2021-0008
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    More about this item

    Keywords

    triangular distribution of abilities; borrowing constraints; education quality; tuition fees;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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