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The determination of public tuition fees in a mixed education system: A majority voting model

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  • Hejer Lasram
  • Didier Laussel

Abstract

We study the determination of public tuition fees through majority voting in a vertical differentiation model where agents' returns on educational investment differ and public and private universities coexist and compete in tuition fees. The private university offers higher educational quality than its competitor, incurring higher unit cost per trained student. The tuition fee for the state university is fixed by majority voting while that for the private follows from profit maximization. Then agents choose to train at the public university or the private one or to remain uneducated. The tax per head adjusts in order to balance the state budget. Because there is a private alternative, preferences for education are not single‐peaked and no single‐crossing condition holds. An equilibrium is shown to exist, which is one of three types: high tuition fee (the “ends” are a majority), low tuition fee (the “middle” is a majority), or mixed (votes tie). The cost structure determines which equilibrium obtains. The equilibrium tuition is either greater (majority at the ends) or smaller (majority at the middle) than the optimal one.

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  • Hejer Lasram & Didier Laussel, 2019. "The determination of public tuition fees in a mixed education system: A majority voting model," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(6), pages 1056-1073, December.
    • Handle: RePEc:bla:jpbect:v:21:y:2019:i:6:p:1056-1073
    DOI: 10.1111/jpet.12317
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    Cited by:

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    2. Debora Di Gioacchino & Laura Sabani & Stefano Usai, 2023. "Why does education expenditure differ across countries? The role of income inequality, human capital and the inclusiveness of education systems," Working Papers in Public Economics 236, University of Rome La Sapienza, Department of Economics and Law.
    3. Rune Stenbacka & Mihkel Tombak, 2020. "University‐firm competition in basic research and university funding policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 1017-1040, August.

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