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Competition between State Universities

We analyse how state university competition to collect resources may a¤ect both the quality of teaching and research. 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 di¤erent types of equilibrium may arise, depending on the mix of research and teaching activity supplied by each university, and the mix of low and high ability students attending each university. The most e¢ cient equilibrium results in the creation of an élite institution attended only by high ability students. Low ability students are segregated in the other university, but obtain the same teaching quality level and pay the same tuition fees.

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Paper provided by Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa in its series Working Papers - Economics with number wp2010_02.rdf.

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Length: 25 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:frz:wpaper:wp2010_02.rdf
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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. Dennis Epple & Richard Romano, 2008. "Educational Vouchers And Cream Skimming," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1395-1435, November.
  3. 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).
  4. Alexander Kemnitz, 2004. "Funding, Competition And Quality In Higher Education," Royal Economic Society Annual Conference 2004 130, Royal Economic Society.
  5. DEL REY, Elena, . "Teaching versus research: a model of state university competition," CORE Discussion Papers RP 1501, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. 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.
  7. 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.
  8. Hindriks, Jean & Myles, Gareth D., 2013. "Intermediate Public Economics," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262018691, June.
  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. 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.
  11. Reinhilde Veugelers & Frederick Van der Ploeg, 2008. "Reforming European Universities: Scope for an Evidence-Based Process," CESifo Working Paper Series 2298, CESifo Group Munich.
  12. 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.
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