IDEAS home Printed from https://ideas.repec.org/p/lhu/wpaper/0001.html
   My bibliography  Save this paper

Merit Aid and Competition in the University Marketplace

Author

Listed:
  • Jim Dearden
  • Rajdeep Grewal

    (Department of Economics, Lehigh University)

  • Gary Lilien

    (Department of Economics, Pennsylvania State University)

Abstract

Colleges and universities in the United States increasingly are turning to merit aid offers as a competitive tool to attract better students. Although the total amount of merit aid offered has increased recently, universities vary dramatically in the amount they use to attract top candidates. Intuitively, better (and wealthier) universities, who have better applicants, should offer more merit aid, but the topranked universities actually offer far less than do others, and some top schools offer no merit aid at all. The authors construct a theoretical model to explain this phenomenon and demonstrate that the quality of universities per se does not drive the negative relationship between university quality and merit aid offers; rather: (1) the differences between the quality levels of competitive universities and (2) the universities’ valuations of applicants drive the negative relationship. Top universities offer less merit aid because they and their immediate competitors represent greater quality differences than do more poorly ranked schools and have access to better safety candidates. We provide empirical evidence to support key assumptions and findings of our model.

Suggested Citation

  • Jim Dearden & Rajdeep Grewal & Gary Lilien, 2006. "Merit Aid and Competition in the University Marketplace," Working Papers 9602, Lehigh University, Department of Economics, revised May 2007.
    • Handle: RePEc:lhu:wpaper:0001
    as

    Download full text from publisher

    File URL: http://www.lehigh.edu/inrepec/articles/11-ectj_Duration_Ohn.pdf
    File Function: First version, 2006
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Merit financial aid; university competition; applied game theory; pricing in quality differentiated; oligopoly;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lhu:wpaper:0001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jim Dearden (email available below). General contact details of provider: https://edirc.repec.org/data/eclehus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.