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Competition between State Universities

  • Lisa Grazzini
  • Annalisa Luporini
  • Alessandro Petretto

We analyse how state university competition to collect resources may affect both research and the quality of teaching. By considering a set-up where two state universities behave strategically, we model their interaction with potential students as a sequential noncooperative game. We show that different types of equilibrium may arise, depending on the mix of research and teaching supplied by each university, and the mix of low- and high-ability students attending each university. The most efficient equilibrium results in the creation of an élite institution attended only by high-ability students who enjoy a higher teaching quality but pay higher tuition fees.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3373.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3373
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  1. De Fraja, Gianni & Valbonesi, Paola, 2012. "The design of the university system," Journal of Public Economics, Elsevier, vol. 96(3), pages 317-330.
  2. Rey, Elena Del, 2001. "Teaching versus Research: A Model of State University Competition," Journal of Urban Economics, Elsevier, vol. 49(2), pages 356-373, March.
  3. Alexander Kemnitz, 2004. "Funding, Competition And Quality In Higher Education," Royal Economic Society Annual Conference 2004 130, Royal Economic Society.
  4. Aghion, Philippe & Dewatripont, Mathias & Hoxby, Caroline & Mas-Colell, Andreu & Sapir, Andreu, 2010. "The governance and performance of universities: evidence from Europe and the US," Scholarly Articles 12502061, Harvard University Department of Economics.
  5. Reinhilde Veugelers & Frederick Van der Ploeg, 2008. "Reforming European Universities: Scope for an Evidence-Based Process," CESifo Working Paper Series 2298, CESifo Group Munich.
  6. De Fraja, Gianni & Iossa, Elisabetta, 2002. "Competition among Universities and the Emergence of the Elite Institution," Bulletin of Economic Research, Wiley Blackwell, vol. 54(3), pages 275-93, July.
  7. Hindriks, Jean & Myles, Gareth D., 2013. "Intermediate Public Economics," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262018691, June.
  8. Dennis Epple & Richard Romano, 2002. "Educational Vouchers and Cream Skimming," NBER Working Papers 9354, National Bureau of Economic Research, Inc.
  9. Rothschild, Michael & White, Lawrence J, 1995. "The Analytics of the Pricing of Higher Education and Other Services in Which the Customers Are Inputs," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 573-86, June.
  10. Tania Oliveira, 2006. "Tuition fees and admission standards: how do public and private universities really compete for students?," Discussion Papers in Economics 06/6, Department of Economics, University of Leicester.
  11. GAUTIER, Axel & WAUTHY, Xavier, 2004. "Teaching versus research: a multi-tasking approach to multi-department universities," CORE Discussion Papers 2004003, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  12. 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.
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