A low-subsidy problem in public higher education
AbstractWith an exogenous public subsidy and a break-even restriction on university net revenue, tuition discrimination supports a quasi-efficient departure from marginal-cost pricing. In contrast, when the legislature and university interact in their subsidy and tuition decisions, the public subsidy becomes endogenous. With an endogenous public subsidy, support by legislatures is affected by the same factors that influence tuition; this leads to a situation where higher tuition revenue is accompanied by a lower public subsidy. The welfare of students declines when this "low-subsidy" case develops. The university's ability to address this issue depends on its being able to commit to a tuition policy, and credible commitment appears consistent with existing institutional conditions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Economics of Education Review.
Volume (Year): 30 (2011)
Issue (Month): 4 (August)
Contact details of provider:
Web page: http://www.elsevier.com/locate/econedurev
Higher-education finance Public subsidies Tuition policy Tuition discrimination;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Epple, Dennis & Romano, Richard & Sieg, Holger, 2000.
"Peer Effects, Financial Aid, and Selection of Students into Colleges and Universities: An Empirical Analysis,"
00-02, Duke University, Department of Economics.
- Holger Sieg & Dennis Epple & Richard Romano, 2003. "Peer effects, financial aid and selection of students into colleges and universities: an empirical analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 501-525.
- Baumol, William J & Bradford, David F, 1970. "Optimal Departures from Marginal Cost Pricing," American Economic Review, American Economic Association, vol. 60(3), pages 265-83, June.
- McDuff, DeForest, 2007. "Quality, tuition, and applications to in-state public colleges," Economics of Education Review, Elsevier, vol. 26(4), pages 433-449, August.
- Dennis Epple & Richard Romano & Holger Sieg, 2006.
"Admission, Tuition, and Financial Aid Policies in the Market for Higher Education,"
Econometric Society, vol. 74(4), pages 885-928, 07.
- Dennis Epple & Richard Romano & Holger Sieg, . "Admission, Tuition, and Financial Aid Policies in the Market for Higher Education," GSIA Working Papers 2003-04, Carnegie Mellon University, Tepper School of Business.
- Braeutigam, Ronald R., 1989. "Optimal policies for natural monopolies," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 23, pages 1289-1346 Elsevier.
- Michael S. Christian, 2007. "Liquidity constraints and the cyclicality of college enrollment in the United States," Oxford Economic Papers, Oxford University Press, vol. 59(1), pages 141-169, January.
- Le Grand, Julian, 1975. "Public Price Discrimination and Aid to Low Income Groups," Economica, London School of Economics and Political Science, vol. 42(165), pages 32-42, February.
- Buss, Christian & Parker, Jeffrey & Rivenburg, Jon, 2004. "Cost, quality and enrollment demand at liberal arts colleges," Economics of Education Review, Elsevier, vol. 23(1), pages 57-65, February.
- Bedard, Kelly & Herman, Douglas A., 2008. "Who goes to graduate/professional school? The importance of economic fluctuations, undergraduate field, and ability," Economics of Education Review, Elsevier, vol. 27(2), pages 197-210, April.
- Fethke, Gary, 2005. "Strategic determination of higher education subsidies and tuitions," Economics of Education Review, Elsevier, vol. 24(5), pages 601-609, October.
- McPherson, Michael S. & Schapiro, Morton Owen, 1997. "Financing Undergraduate Education: Designing National Policies," National Tax Journal, National Tax Association, vol. 50(3), pages 557-71, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.