Education, Research and the Impact of Tuition Fees - A Simple Model of the University
The present paper analyses the behaviour of a university within a neoclassical equilibrium framework. Demand for enrolments is traced back to the decision of potential students which aim at maximizing expected lifetime income. Here, the key factors are the students’ preferences and abilities, the quality of education offered by the university and several external determinants like, e.g., tuition fees and differences in income between graduates and non-graduates. In turn, the behaviour of the university in terms of educational efforts and the strength of academic standards depends on the demand for enrolments, on financial resources available and on the specific objectives pursued by the university. The main emphasis is on the implications of different funding mechanism (governmental grants vs. tuition fees) in combination with different objectives pursued (maximizing enrolments vs. maximizing prestige via research output). It is shown that for given financial resources a university that aims at maximizing prestige always provides only a lower quality of education for a smaller number of students compared to a university that aims at maximizing enrolments. Moreover, the effects caused by changes in governmental grants or tuition fees are quite different depending on the university’s objectives. Yet, there is also one common feature: Irrespective of which utility function is maximized, partially substituting governmental grants by tuition fees would change neither educational efforts nor academic standards, but it would inevitably lead to decreasing enrolments. As a positive side-effect, however, the average ability of the remaining population of students would increase.
|Date of creation:||Aug 2004|
|Contact details of provider:|| Postal: Universitaetsstrasse 16, D-86159 Augsburg, Germany|
Phone: +49 821 598 4060
Fax: +49 821 598 4217
Web page: http://www.wiwi.uni-augsburg.de/vwl/institut
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael Rothschild & Lawrence J. White, 1993.
"The University in the Marketplace: Some Insights and Some Puzzles,"
in: Studies of Supply and Demand in Higher Education, pages 11-42
National Bureau of Economic Research, Inc.
- Michael Rothschild & Lawrence J. White, 1991. "The University in the Marketplace: Some Insights and Some Puzzles," NBER Working Papers 3853, National Bureau of Economic Research, Inc.
- Michael Hoy & John Livernois & Chris McKenna & Ray Rees & Anthanassios Stengos, 2001. "Mathematics for Economics, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582074. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:aug:augsbe:0265. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dr. Albrecht Bossert)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.