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Competition, Incentives, and the Distribution of Investments in Private School Markets

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  • Matías Tapia

Abstract

This paper develops a one-to-one matching model to analyze how different education funding regimes affect incentives and equilibrium allocations in competitive markets served by heterogeneous private providers. The main result is that alternative funding schemes change the relative incentives faced by schools with different productivities, dramatically altering equilibrium allocations and outcomes. The paper also explicitly characterizes equilibrium in markets served by for-profit and non-profit schools, an analysis that has not been made in previous literature. The basic version of the model is calibrated using data from Chile´s education market and used to simulate the impact of alternative policy scenarios.

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Bibliographic Info

Paper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 387.

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Date of creation: 2010
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Handle: RePEc:ioe:doctra:387

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Related research

Keywords: Education funding; school competition; heterogeneous firms; for-profit and non-profit firms;

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Cited by:
  1. Christian Ferreda & Matías Tapia, 2010. "Redistributive Taxation, Incentives, and the Intertemporal Evolution of Human Capital," Documentos de Trabajo 390, Instituto de Economia. Pontificia Universidad Católica de Chile..
  2. Francisco Gallego, 2012. "When does Inter-School Competition Matter? Evidence from the Chilean 'Voucher' System," Documentos de Trabajo 429, Instituto de Economia. Pontificia Universidad Católica de Chile..

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