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Spatial Competition And The Price Of College

Author

Listed:
  • DANIEL P. McMILLEN
  • LARRY D. SINGELL
  • GLEN R. WADDELL

Abstract

"This article provides the first evidence that universities compete directly on price, and that the market for students depends on the proximity of competitors. Exploiting detailed data from private U.S. universities, price competition is tested by introducing geographic proximity into a spatial-autoregressive tuition model. Standard spatial models show that list and net tuition are inversely related to distance between institutions, consistent with price competition in higher education. An extension to the spatial-econometrics literature relaxes a constraint that estimated spatial relationships are common across all observations, implying that spatial effects differ across qualitative classes of institutions". ("JEL "C21, I2, L11) Copyright 2007 Western Economic Association International.

Suggested Citation

  • DANIEL P. McMILLEN & LARRY D. SINGELL & GLEN R. WADDELL, 2007. "Spatial Competition And The Price Of College," Economic Inquiry, Western Economic Association International, vol. 45(4), pages 817-833, October.
  • Handle: RePEc:bla:ecinqu:v:45:y:2007:i:4:p:817-833
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    References listed on IDEAS

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    1. Caroline M. Hoxby, 2000. "Benevolent Colluders? The Effects of Antitrust Action on College Financial Aid and Tuition," NBER Working Papers 7754, National Bureau of Economic Research, Inc.
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    10. Parker, Jeffrey & Summers, Jeffrey, 1993. "Tuition and enrollment yield at selective liberal arts colleges," Economics of Education Review, Elsevier, vol. 12(4), pages 311-324, December.
    11. Anselin, Luc & Varga, Attila & Acs, Zoltan, 1997. "Local Geographic Spillovers between University Research and High Technology Innovations," Journal of Urban Economics, Elsevier, vol. 42(3), pages 422-448, November.
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    Citations

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    Cited by:

    1. Shaoling Chen & Susheng Wang & Haisheng Yang, 2015. "Spatial Competition and Interdependence in Strategic Decisions: Empirical Evidence from Franchising," Economic Geography, Clark University, vol. 91(2), pages 165-204, April.
    2. Cory Koedel, 2009. "Postsecondary Education Structure," Working Papers 0906, Department of Economics, University of Missouri, revised 04 Oct 2010.
    3. Manuel S. González Canché, 2017. "The Heterogeneous Non-resident Student Body: Measuring the Effect of Out-Of-State Students’ Home-State Wealth on Tuition and Fee Price Variations," Research in Higher Education, Springer;Association for Institutional Research, vol. 58(2), pages 141-183, March.
    4. Winters, John V., 2012. "Cohort crowding and nonresident college enrollment," Economics of Education Review, Elsevier, vol. 31(3), pages 30-40.
    5. Firgo, Matthias & Kügler, Agnes, 2014. "Detecting Collusion in Spatially Differentiated Markets," Department of Economics Working Paper Series 4347, WU Vienna University of Economics and Business.
    6. Caroline Elliott & Kwok Tong Soo, 2012. "The International Market for MBA Qualifications," Working Papers 24284581, Lancaster University Management School, Economics Department.
    7. Gonzalez Canche, Manuel Sacramento, 2014. "Localized competition in the non-resident student market," Economics of Education Review, Elsevier, vol. 43(C), pages 21-35.
    8. Heather Antecol & Janet Kiholm Smith, 2012. "The Early Decision Option in College Admission and Its Impact on Student Diversity," Journal of Law and Economics, University of Chicago Press, vol. 55(1), pages 217-249.
    9. Elhorst, J. Paul & Lacombe, Donald J. & Piras, Gianfranco, 2012. "On model specification and parameter space definitions in higher order spatial econometric models," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 211-220.
    10. Iwata, Shinichiro & Sumita, Kazuto & Fujisawa, Mieko, 2012. "Price competition in the spatial real estate market: Allies or rivals?," MPRA Paper 37438, University Library of Munich, Germany.
    11. López-Hernández, Fernando A., 2013. "Second-order polynomial spatial error model. Global and local spatial dependence in unemployment in Andalusia," Economic Modelling, Elsevier, vol. 33(C), pages 270-279.
    12. Elliott, Caroline & Soo, Kwok Tong, 2013. "The international market for MBA qualifications: The relationship between tuition fees and applications," Economics of Education Review, Elsevier, vol. 34(C), pages 162-174.
    13. Li, Kunpeng, 2017. "Fixed-effects dynamic spatial panel data models and impulse response analysis," Journal of Econometrics, Elsevier, vol. 198(1), pages 102-121.

    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • I2 - Health, Education, and Welfare - - Education
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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