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Competition, Incentives, and the Distribution of Investments in Private School Markets

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  • Matías Tapia

Abstract

This paper develops a one-to-one matching model to analyze how different education funding regimes affect incentives and equilibrium allocations in competitive markets served by heterogeneous private providers. The main result is that alternative funding schemes change the relative incentives faced by schools with different productivities, dramatically altering equilibrium allocations and outcomes. The paper also explicitly characterizes equilibrium in markets served by for-profit and non-profit schools, an analysis that has not been made in previous literature. The basic version of the model is calibrated using data from Chile's education market and used to simulate the impact of alternative policy scenarios.

Suggested Citation

  • Matías Tapia, 2010. "Competition, Incentives, and the Distribution of Investments in Private School Markets," Documentos de Trabajo 387, Instituto de Economia. Pontificia Universidad Católica de Chile..
  • Handle: RePEc:ioe:doctra:387
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    File URL: http://www.economia.uc.cl/docs/dt_387.pdf
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    References listed on IDEAS

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    1. Alberto Alesina & Filipe R. Campante & Guido Tabellini, 2008. "Why is Fiscal Policy Often Procyclical?," Journal of the European Economic Association, MIT Press, vol. 6(5), pages 1006-1036, September.
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    3. Ernesto Stein & Ernesto Talvi & Alejandro Grisanti, 1999. "Institutional Arrangements and Fiscal Performance: The Latin American Experience," NBER Chapters,in: Fiscal Institutions and Fiscal Performance, pages 103-134 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Francisco Gallego, 2012. "When does Inter-School Competition Matter? Evidence from the Chilean 'Voucher' System," Documentos de Trabajo 429, Instituto de Economia. Pontificia Universidad Católica de Chile..
    2. Christian Ferreda & Matías Tapia, 2010. "Redistributive Taxation, Incentives, and the Intertemporal Evolution of Human Capital," Documentos de Trabajo 390, Instituto de Economia. Pontificia Universidad Católica de Chile..
    3. Gallego Francisco, 2013. "When Does Inter-School Competition Matter? Evidence from the Chilean “Voucher” System," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(2), pages 525-562, August.

    More about this item

    Keywords

    Education funding; school competition; heterogeneous firms; for-profit and non-profit firms;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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