Why Is There No Harvard Among Japanese Private Universities?

The social and academic reputation of private universities in Japan is generally far behind the national universities. We argue that heavy subsidy and the low tuition of national universities determined by the central government are both responsible for making the production of high academic quality difficult for private universities in equilibrium. Using several simulations based on a theoretical model of assignment of heterogeneous students and universities with respect to tuition and educational quality, we show that the distribution of tuitions and academic quality of private universities are affected by the low tuition and heavy subsidy policy of national university. Using the cross-section data of all universities in Japan, we present empirical evidence on the determinants of tuition of private universities that support our theoretical prediction