This paper analyzes a competition game between two universities that teach and research in the same jurisdiction. The resulting equilibrium is unique and symmetric but differs according to preferences, technologies and public policy. The budget for university finance is exogenously given and consists of lump-sum amount and a per-student allocation. Under this finance structure, we are able to identify four types of equilibria characterized, respectively, by full-time teaching,full-time research, selective teaching plus research and mass teaching plus research. Conditions for each of them to take place are derived. By manipulating the parameters of the finance scheme the government can, in some cases, determine final levels of research and education quality.
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number
2000030.
Find related papers by JEL classification: H8 - Public Economics - - Miscellaneous Issues I2 - Health, Education, and Welfare - - Education L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
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