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Estimating an Equilibrium Model of Horizontal Competition in Education

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  • Natalie Bau

Abstract

The quality of the match between students and schools affects learning, but little is known about the magnitude of these effects or how they respond to changes in market structure. I develop a quantitative equilibrium model of school competition with horizontal competition in match quality. I estimate the model using data from Pakistan, a country with high private enrollment, and (1) quantify the importance of good matches, (2) show that profit-maximizing private schools’ choices of quality advantage wealthier students, increasing inequality and reducing welfare and learning, and (3) provide intuition for when interventions in the market are valuable.

Suggested Citation

  • Natalie Bau, 2022. "Estimating an Equilibrium Model of Horizontal Competition in Education," Journal of Political Economy, University of Chicago Press, vol. 130(7), pages 1717-1764.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/719760
    DOI: 10.1086/719760
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    Cited by:

    1. Abhijeet Singh & Mauricio Romero & Karthik Muralidharan, 2022. "Covid-19 Learning Loss and Recovery: Panel Data Evidence from India," NBER Working Papers 30552, National Bureau of Economic Research, Inc.
    2. Bagde, Surendrakumar & Epple, Dennis & Taylor, Lowell, 2022. "The emergence of private high schools in India: The impact of public-private competition on public school students," Journal of Public Economics, Elsevier, vol. 215(C).
    3. Marco Ovidi, 2022. "Parents Know Better: Sorting on Match Effects in Primary School," DISCE - Working Papers del Dipartimento di Economia e Finanza def121, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

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