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University Competition and Transnational Education: The Choice of Branch Campus

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  • Joanna Poyago-Theotoky

    (La Trobe University, Melbourne,)

  • Alessandro Tampieri

    (CREA, Université du Luxembourg)

Abstract

We present a theoretical framework in which an elitist and a non- elitist university in a developed country compete by choosing their admission standards and deciding whether or not to open a branch campus in a developing country. Students from a developing country attend university either if a branch campus is opened or if they can afford to move to the developed country. We characterise the equi- libria by focussing on the relationship between the investment costs of a branch campus and the graduate wage. There are three type of equilibria: (i) no branch campus, (ii) only the elitist university opens a branch campus and (iii) both universities engage in transnational education, opening a branch campus. Very high investment costs dis- courage the opening of a branch campus. A rise in the graduate wage increases the incentive for opening a branch campus, although this incentive is stronger for the elitist than the non-elitist university. Sur- prisingly, a government subsidy for opening a branch campus may be ineffective in increasing university attendance.

Suggested Citation

  • Joanna Poyago-Theotoky & Alessandro Tampieri, 2014. "University Competition and Transnational Education: The Choice of Branch Campus," DEM Discussion Paper Series 14-11, Department of Economics at the University of Luxembourg.
  • Handle: RePEc:luc:wpaper:14-11
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    File URL: https://hdl.handle.net/10993/19112
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    References listed on IDEAS

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    More about this item

    Keywords

    University Competition; Branch Campus; Admission Standards; Transnational Education;
    All these keywords.

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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