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Competition Between Public And Private Universities: Quality, Prices And Exams

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  • Laura Romero

    ()

  • Elena del Rey

Abstract

The rapid growth of private higher education in response to high demand is a recent phenomenon in most European countries. This paper provides a theoretical model of the higher education market in which a public and a private university compete for students in the presence of borrowing constraints. We find that there exists a unique equilibrium in which the public institution is of higher quality than the private institution. This result supports the observation across many European countries that public universities have usually higher quality and admission standards than their private competitors.

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File URL: http://docubib.uc3m.es/WORKINGPAPERS/WE/we046423.pdf
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Bibliographic Info

Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we046423.

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Date of creation: Nov 2004
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Handle: RePEc:cte:werepe:we046423

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References

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  1. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post-Secondary Schooling," NBER Working Papers 9055, National Bureau of Economic Research, Inc.
  2. De Fraja, Gianni & Iossa, Elisabetta, 2002. "Competition among Universities and the Emergence of the Elite Institution," Bulletin of Economic Research, Wiley Blackwell, vol. 54(3), pages 275-93, July.
  3. Fernandez, R., 1998. "Education and Borrowing Constraints: Tests vs Prices," Working Papers 98-17, C.V. Starr Center for Applied Economics, New York University.
  4. Gordon C. Winston, 1999. "Subsidies, Hierarchy and Peers: The Awkward Economics of Higher Education," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 13-36, Winter.
  5. Rothschild, Michael & White, Lawrence J, 1995. "The Analytics of the Pricing of Higher Education and Other Services in Which the Customers Are Inputs," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 573-86, June.
  6. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
  7. Hanushek, Eric A, 1986. "The Economics of Schooling: Production and Efficiency in Public Schools," Journal of Economic Literature, American Economic Association, vol. 24(3), pages 1141-77, September.
  8. del Rey, Elena & Romero, Laura, 2004. "Prices versus Exams as Strategic Instruments for Competing Universities," Working Papers of the Department of Economics, University of Girona 12, Department of Economics, University of Girona.
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Citations

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Cited by:
  1. Joan Rosselló Villalonga, 2013. "Stratification of Public Universities and Students’ Segregation," Hacienda Pública Española, IEF, vol. 205(2), pages 99-124, June.
  2. Laura Romero, 2005. "On the role of borrowing constraints in public and private universities' choices," Economics Bulletin, AccessEcon, vol. 9(6), pages 1-8.
  3. Cremer, Helmuth & Maldonado, Dario, 2013. "Mixed oligopoly in education," TSE Working Papers 13-381, Toulouse School of Economics (TSE).
  4. del Rey, Elena & Romero, Laura, 2004. "Prices versus Exams as Strategic Instruments for Competing Universities," Working Papers of the Department of Economics, University of Girona 12, Department of Economics, University of Girona.
  5. Nihat Kamil Anil & Gulnur Eti Icli, 2013. "MBA sudents' satisfaction and loyality: state vs. private universities in Turkey," Tržište/Market, Faculty of Economics and Business, University of Zagreb, vol. 25(2), pages 177-198.
  6. Irina Khovanskaya & Konstantin Sonin & Maria Yudkevich, 2007. "Budget Uncertainty and Faculty Contracts: A Dynamic Framework for Comparative Analysis," Working Papers w0112, Center for Economic and Financial Research (CEFIR).
  7. Joan Rosselló, 2007. "Does a public university system avoid the stratification of public universities and the segregation of students?," DEA Working Papers 26, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  8. repec:ebl:ecbull:v:9:y:2005:i:6:p:1-8 is not listed on IDEAS
  9. Joan Rosselló-Villalonga, 2007. "¿Debería tener las universidades total autonomía en la selección del profesorado," Investigaciones Economicas, Fundación SEPI, vol. 31(3), pages 374-414, September.

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