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Choice and Competition in Education Markets


  • Patrick J. Bayer
  • Robert McMillan


This paper presents a new approach for measuring the effects of competition on school performance. We use an equilibrium sorting model to generate an intuitive measure of the competition each school faces, captured by the slope of the school’s demand curve. We then show that this competition measure is positively related to school performance using rich Census data: a one standard-deviation increase in competitiveness leads to a 0.1 standard-deviation performance improvement, controlling for a host of other factors. This positive performance relationship is consistent with strong supply responsiveness, relevant to the school choice debate.

Suggested Citation

  • Patrick J. Bayer & Robert McMillan, 2010. "Choice and Competition in Education Markets," Working Papers 10-47, Duke University, Department of Economics.
  • Handle: RePEc:duk:dukeec:10-47

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    References listed on IDEAS

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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Hazans, Mihails, 2010. "Teacher Pay, Class Size and Local Governments: Evidence from the Latvian Reform," IZA Discussion Papers 5291, Institute for the Study of Labor (IZA).
    2. Gibbons, Stephen & McNally, Sandra & Viarengo, Martina, 2011. "Does additional spending help urban schools? An evaluation using boundary discontinuities," LSE Research Online Documents on Economics 44676, London School of Economics and Political Science, LSE Library.
    3. Caetano, Gregorio & Maheshri, Vikram, 2017. "School segregation and the identification of tipping behavior," Journal of Public Economics, Elsevier, vol. 148(C), pages 115-135.
    4. Friesen, Jane & Harris, Benjamin Cerf & Woodcock, Simon, 2013. "Open Enrolment and Student Achievement," CLSSRN working papers clsrn_admin-2013-46, Vancouver School of Economics, revised 22 Mar 2014.

    More about this item


    Competition; School Choice; Sorting Model; Education Demand; School Performance;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand


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