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Funding Mechanisms for Higher Education: A Marketing Perspective

Author

Listed:
  • Daniel Halbheer

    (HEC Paris - Ecole des Hautes Etudes Commerciales)

  • Gila Fruchter
  • Eitan Gerstner
  • Thomas Reutterer

    (Vienna University of Economics and Business - WU - Wirtschaftsuniversität Wien [Austria])

Abstract

This paper develops an analytical model to investigate the impact of governmental funding of higher education on educational outcomes including tuition, graduation rates, and enrollment. Assuming that students make an enrollment decision based on tuition, graduation rate, and labor market prospects, we show that push and pull funding strategies are equally effective in lowering net tuition and in increasing enrollment, the expected graduation rate, and social welfare without compromising the academic standards. We also show that a policy change from enrollment-based funding to performance-based funding raises graduation rates but does not necessarily improve the performance of the education system.

Suggested Citation

  • Daniel Halbheer & Gila Fruchter & Eitan Gerstner & Thomas Reutterer, 2019. "Funding Mechanisms for Higher Education: A Marketing Perspective," Working Papers hal-02896030, HAL.
    • Handle: RePEc:hal:wpaper:hal-02896030
    DOI: 10.2139/ssrn.3377734
    as

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