Tuition fees and admission standards: how do public and private universities really compete for students?
We study a market where two universities, a public and a private one, compete for students by setting admission standards. Students differ in ability and receive a wage premium for participating in higher education. This wage increases with the quality of the university attended. The private university maximizes profits, the public university maximizes welfare. We show that there is no "same-standard" equilibrium. In a specific example we show that multiple equilibria can exist. In one equilibrium the private university sets a higher admission standard, and in the other equilibrium the public university sets a higher admission standard.
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- Fernando Galindo-Rueda & Anna Vignoles, 2004.
"The Declining Relative Importance Of Ability In Predicting Educational Attainment,"
Royal Economic Society Annual Conference 2004
40, Royal Economic Society.
- Fernando Galindo-Rueda & Anna Vignoles, 2005. "The Declining Relative Importance of Ability in Predicting Educational Attainment," Journal of Human Resources, University of Wisconsin Press, vol. 40(2).
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