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Tuition fees and admission standards: how do public and private universities really compete for students?

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  • Tania Oliveira

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Abstract

We study a market where two universities, a public and a private one, compete for students by setting admission standards. Students differ in ability and receive a wage premium for participating in higher education. This wage increases with the quality of the university attended. The private university maximizes profits, the public university maximizes welfare. We show that there is no "same-standard" equilibrium. In a specific example we show that multiple equilibria can exist. In one equilibrium the private university sets a higher admission standard, and in the other equilibrium the public university sets a higher admission standard.

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File URL: http://www.le.ac.uk/economics/research/RePEc/lec/leecon/dp06-6.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 06/6.

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Date of creation: Apr 2006
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Handle: RePEc:lec:leecon:06/6

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Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
Phone: +44 (0)116 252 2887
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Web page: http://www2.le.ac.uk/departments/economics
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Keywords: Competition between private and public universities; educational standards;

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References

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  1. Fernando Galindo-Rueda & Anna Vignoles, 2004. "The Declining Relative Importance Of Ability In Predicting Educational Attainment," Royal Economic Society Annual Conference 2004 40, Royal Economic Society.
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Cited by:
  1. Giorgio Brunello & Lorenzo Rocco, 2005. "Educational Standards in Private and Public Schools," CESifo Working Paper Series 1418, CESifo Group Munich.
  2. Lisa Grazzini & Annalisa Luporini & Alessandro Petretto, 2011. "Competition between State Universities," CESifo Working Paper Series 3373, CESifo Group Munich.
  3. 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.

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