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Regulation in the Market for Education and Optimal Choice of Curriculum

  • Gerald Eisenkopf

    ()

    (Department of Economics, University of Konstanz, Germany)

  • Ansgar Wohlschlegel

    ()

    (Wirtschaftspolitische Abteilung, University of Bonn, Germany)

We analyze educational institutions’ incentives to set up demanding or lax curricula in duopolistic markets for education with endogenous enrolment of students. We assume that there is a positive externality of student achievement on the local economy. Comparing the case of regulated tuition fees with an unregulated market, we identify the following inefficiencies: Under regulated tuition fees schools will set up inefficiently lax curricula in an attempt to please low-quality students even if schools internalize some of the externality. On the other hand, unregulated schools set up excessively differentiated curricula in order to relax competition in tuition fees. Deregulation gets more attractive if a larger fraction of the externality is internalized.

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Paper provided by Department of Economics, University of Konstanz in its series Working Paper Series of the Department of Economics, University of Konstanz with number 2011-16.

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Length: 38 pages
Date of creation: 24 May 2011
Date of revision:
Handle: RePEc:knz:dpteco:1116
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