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Regulation in the market for education and optimal choice of curriculum

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  • Eisenkopf, Gerald
  • Wohlschlegel, Ansgar

Abstract

We analyze educational institutions’ incentives to set up demanding or lax curricula in duopolistic markets for education with endogenous enrolment of students. We assume that there is a positive externality from student achievement to the local economy. Comparing the case of regulated tuition fees with an unregulated market, we identify the following inefficiencies: Under regulated tuition fees schools will set up inefficiently lax curricula in an attempt to please low-quality students even if schools internalize some of the externality. On the other hand, unregulated schools set up excessively differentiated curricula in order to relax competition in tuition fees. Deregulation gets more attractive if a larger fraction of the externality is internalized.

Suggested Citation

  • Eisenkopf, Gerald & Wohlschlegel, Ansgar, 2012. "Regulation in the market for education and optimal choice of curriculum," Journal of Urban Economics, Elsevier, vol. 71(1), pages 53-65.
  • Handle: RePEc:eee:juecon:v:71:y:2012:i:1:p:53-65 DOI: 10.1016/j.jue.2011.09.001
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    Cited by:

    1. Su, Xuejuan & Kaganovich, Michael, 2012. "College Expansion and Curriculum Choice," Working Papers 2012-25, University of Alberta, Department of Economics, revised 01 Apr 2015.
    2. Andrietti, Vincenzo & Su, Xuejuan, 2016. "Education Curriculum and Student Achievement: Theory and Evidence," Working Papers 2016-12, University of Alberta, Department of Economics.
    3. Xefteris, Dimitrios, 2013. "Equilibria in unidirectional spatial models," Economics Letters, Elsevier, vol. 119(2), pages 146-149.

    More about this item

    Keywords

    Education; Local externalities; Product differentiation; Price competition; Vouchers;

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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