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Product Differentiation and Public Education

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  • William H. Hoyt
  • Richard A. Jensen

Abstract

We demonstrate that differentiation in public services can arise as a way of reducing competition among cities. Quality differentiation can be particularly relevant to the provision of education. If cities finance education through a property tax that generates “tax competition,” we find that quality differentiation in education changes the amount of educational services provided. In the case of property‐value maximization, this means a reduction in educational services in both the city with high quality and that with low quality. The reduction in educational services means that under reasonable conditions property values in both cities can increase.

Suggested Citation

  • William H. Hoyt & Richard A. Jensen, 2001. "Product Differentiation and Public Education," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(1), pages 69-93, January.
    • Handle: RePEc:bla:jpbect:v:3:y:2001:i:1:p:69-93
    DOI: 10.1111/1097-3923.00055
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    Cited by:

    1. Abdessalam, A. H., 2014. "Tax competition and the determination of the quality of public goods," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-20.
    2. Zissimos, Ben & Wooders, Myrna, 2008. "Public good differentiation and the intensity of tax competition," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1105-1121, June.
    3. Zissimos, Ben & Wooders, Myrna, 2005. "Relaxing Tax Competition through Public Good Differentation," The Warwick Economics Research Paper Series (TWERPS) 737, University of Warwick, Department of Economics.
    4. Alexander Haupt & Tim Krieger & Thomas Lange, 2016. "Competition for the international pool of talent," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(4), pages 1113-1154, October.
    5. Alexander Haupt & Tim Krieger & Thomas Lange, 2011. "Competition for the International Pool of Talent: Education Policy and Student Mobility," Working Papers CIE 35, Paderborn University, CIE Center for International Economics.

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    More about this item

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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