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Online or face-to-face? Competition among MOOC and regular education providers

Author

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  • Han, Haipeng
  • Lien, Donald
  • Lien, Jaimie W.
  • Zheng, Jie

Abstract

Although the importance of online education has long been anticipated, recent conditions in society have accelerated the necessity and popularity of online education by various institutions. We analyze the competition between online and in-person education in a spatial location and pricing game, in which regular education providers located along the Salop circle are competing with online education providers located at the center of the Salop circle. Our model allows education providers to have as their objective, a combination of profits and social welfare considerations. We derive equilibria in a framework with N universities that vary in terms of the composition of online and offline options. Prices, market shares, and social welfare are analyzed in relation to students’ relative preferences for each mode of education, as well as universities’ degree of social welfare considerations. We also consider two main extensions to the model: asymmetric marginal costs of regular universities and MOOCs, and heterogeneity in universities’ objective functions.

Suggested Citation

  • Han, Haipeng & Lien, Donald & Lien, Jaimie W. & Zheng, Jie, 2022. "Online or face-to-face? Competition among MOOC and regular education providers," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 857-881.
    • Handle: RePEc:eee:reveco:v:80:y:2022:i:c:p:857-881
    DOI: 10.1016/j.iref.2022.02.061
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