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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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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. 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.
  2. 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.
  3. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post--secondary Schooling," Economic Journal, Royal Economic Society, vol. 112(482), pages 705-734, October.
  4. 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.
  5. Fernández, Raquel, 1998. "Education and Borrowing Constraints: Tests Vs. Prices," CEPR Discussion Papers 1913, C.E.P.R. Discussion Papers.
  6. 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.
  7. 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.
  8. 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.
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Cited by:
  1. 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.
  2. Joan Rosselló-Villalonga, 2012. "Stratification of public universities and students's segretation," DEA Working Papers 45, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  3. K. Sonin & I. Khovanskaya & M. Yudkevich., 2008. "Budget Uncertainty and Faculty Contracts: A Dynamic Framework for Comparative Analysis," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
  4. Joan Rosselló, 2006. "¿Deberían tener las universidades total autonomía en la selección del profesorado?," DEA Working Papers 25, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  5. 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.
  6. Helmuth Cremer & Dario Maldonado, 2013. "Mixed Oligopoly in Education," CESifo Working Paper Series 4163, CESifo Group Munich.
  7. 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.
  8. repec:ebl:ecbull:v:9:y:2005:i:6:p:1-8 is not listed on IDEAS
  9. Laura Romero, 2005. "On the role of borrowing constraints in public and private universities' choices," Economics Bulletin, AccessEcon, vol. 9(6), pages 1-8.

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