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The determination of public tuition fees in a mixed education system: A majority voting model

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  • Hejer Lasram
  • Didier Laussel

Abstract

We study the determination of public tuition fees through majority voting in a vertical differentiation model where agents' returns on educational investment differ and public and private universities coexist and compete in tuition fees. The private university offers higher educational quality than its competitor, incurring higher unit cost per trained student. The tuition fee for the state university is fixed by majority voting while that for the private follows from profit maximization. Then agents choose to train at the public university or the private one or to remain uneducated. The tax per head adjusts in order to balance the state budget. Because there is a private alternative, preferences for education are not single‐peaked and no single‐crossing condition holds. An equilibrium is shown to exist, which is one of three types: high tuition fee (the “ends” are a majority), low tuition fee (the “middle” is a majority), or mixed (votes tie). The cost structure determines which equilibrium obtains. The equilibrium tuition is either greater (majority at the ends) or smaller (majority at the middle) than the optimal one.

Suggested Citation

  • Hejer Lasram & Didier Laussel, 2019. "The determination of public tuition fees in a mixed education system: A majority voting model," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(6), pages 1056-1073, December.
    • Handle: RePEc:bla:jpbect:v:21:y:2019:i:6:p:1056-1073
    DOI: 10.1111/jpet.12317
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    Cited by:

    1. Ashantha Ranasinghe & Xuejuan Su, 2023. "When social assistance meets market power: A mixed duopoly view of health insurance in the United States," Economic Inquiry, Western Economic Association International, vol. 61(4), pages 851-869, October.
    2. Debora Di Gioacchino & Laura Sabani & Stefano Usai, 2025. "Public Versus Private Investment in Education in a Two Tiers System: The Role of Income Inequality and Intergenerational Persistence in Education," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 11(1), pages 253-284, March.
    3. Debora Di Gioacchino & Laura Sabani & Stefano Usai, 2023. "Why does education expenditure differ across countries? The role of income inequality, human capital and the inclusiveness of education systems," Working Papers in Public Economics 236, Department of Economics and Law, Sapienza University of Rome.
    4. Rune Stenbacka & Mihkel Tombak, 2020. "University‐firm competition in basic research and university funding policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 1017-1040, August.
    5. Kolpin, Van & Stater, Mark, 2024. "The perverse equilibrium effects of state and federal student aid in higher education," Journal of Economic Behavior & Organization, Elsevier, vol. 217(C), pages 679-691.

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