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Multi-dimensional skills, specialization, and oligopolistic competition in higher education

  • Sarpça, Sinan

This paper develops a differentiated products model of school competition that distinguishes among different dimensions that matter in the skill acquisition process. The model predicts that when identical schools compete for students, specialization may arise as a competition strategy. This serves rich students' education goals well. Poorer students, however, may attend schools with specializations that do not cater to their relative strengths. By doing so, these poorer students complement the weaknesses of the richer students through peer effects and receive financial aid in return. The empirical analysis provides strong support for the model's predictions about within-school implications of specialization.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 94 (2010)
Issue (Month): 9-10 (October)
Pages: 800-811

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Handle: RePEc:eee:pubeco:v:94:y:2010:i:9-10:p:800-811
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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  1. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
  2. Stacy Berg Dale & Alan B. Krueger, 2002. "Estimating The Payoff To Attending A More Selective College: An Application Of Selection On Observables And Unobservables," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1491-1527, November.
  3. Dennis Epple & Richard Romano & Holger Sieg, . "Admission, Tuition, and Financial Aid Policies in the Market for Higher Education," GSIA Working Papers 2003-04, Carnegie Mellon University, Tepper School of Business.
  4. Manski, Charles F, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Wiley Blackwell, vol. 60(3), pages 531-42, July.
  5. Bénabou, Roland, 2000. "Tax And Education Policy In A Heterogeneous Agent Economy: What Levels Of Redistribution Maximize Growth And Efficiency?," CEPR Discussion Papers 2446, C.E.P.R. Discussion Papers.
  6. Flavio Cunha & James J. Heckman & Lance Lochner & Dimitriy V. Masterov, 2005. "Interpreting the Evidence on Life Cycle Skill Formation," NBER Working Papers 11331, National Bureau of Economic Research, Inc.
  7. Holger Sieg & Dennis Epple & Richard Romano, 2003. "Peer effects, financial aid and selection of students into colleges and universities: an empirical analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 501-525.
  8. de Bartolome, Charles A M, 1990. "Equilibrium and Inefficiency in a Community Model with Peer Group Effects," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 110-33, February.
  9. Raquel Fernandez & Richard Rogerson, 1999. "Equity and Resources: An Analysis of Education Finance Systems," NBER Working Papers 7111, National Bureau of Economic Research, Inc.
  10. Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.
  11. James Heckman & Pedro Carneiro & Flavio Cunha, 2004. "The Technology of Skill Formation," 2004 Meeting Papers 681, Society for Economic Dynamics.
  12. Jo Blanden & Paul Gregg & Lindsey MacMillan, 2007. "Accounting for Intergenerational Income Persistence: Noncognitive Skills, Ability and Education," School of Economics Discussion Papers 0307, School of Economics, University of Surrey.
  13. Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
  14. Erich Battistin & Richard Blundell & Arthur Lewbel, 2007. "Why is consumption more log normal than income? Gibrat's law revisited," IFS Working Papers W07/08, Institute for Fiscal Studies.
  15. Stinebrickner, Ralph & Stinebrickner, Todd R., 2006. "What can be learned about peer effects using college roommates? Evidence from new survey data and students from disadvantaged backgrounds," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1435-1454, September.
  16. Elizabeth M. Caucutt, 2002. "Educational Vouchers When There Are Peer Group Effects--Size Matters," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 195-222, February.
  17. Dennis Epple & Richard Romano & Sinan Sarpaca & Holger Sieg, 2006. "Profiling in Bargaining Over College Tuition," Economic Journal, Royal Economic Society, vol. 116(515), pages F459-F479, November.
  18. Thomas J. Nechyba, 2000. "Mobility, Targeting, and Private-School Vouchers," American Economic Review, American Economic Association, vol. 90(1), pages 130-146, March.
  19. Peter Arcidiacono & Sean Nicholson, 2002. "Peer Effects in Medical School," NBER Working Papers 9025, National Bureau of Economic Research, Inc.
  20. Bruce Sacerdote, 2001. "Peer Effects With Random Assignment: Results For Dartmouth Roommates," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 681-704, May.
  21. Gordon C. Winston & David J. Zimmerman, 2003. "Peer Effects in Higher Education," Williams Project on the Economics of Higher Education DP-64, Department of Economics, Williams College.
    • Gordon Winston & David Zimmerman, 2004. "Peer Effects in Higher Education," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 395-424 National Bureau of Economic Research, Inc.
  22. Henderson, Vernon & Mieszkowski, Peter & Sauvageau, Yvon, 1978. "Peer group effects and educational production functions," Journal of Public Economics, Elsevier, vol. 10(1), pages 97-106, August.
  23. James, Estelle, et al, 1989. "College Quality and Future Earnings: Where Should You Send Your Child to College?," American Economic Review, American Economic Association, vol. 79(2), pages 247-52, May.
  24. Jeff Grogger & Eric Eide, 1995. "Changes in College Skills and the Rise in the College Wage Premium," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 280-310.
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