This paper considers the influence of spatial competition on education and its effect on students' school choice and educational achievement by explicitely modeling educational production and the students' participation decision. Education at school is a function of teacher effort and class size. Students decide which school to attend on the basis of an assessment of the associated costs and prospective benefits from doing so. We analyze how competition between schools affects equilibrium resource spending and school diversity as well as the level and distribution of student attainment and welfare. The consideration of spatial aspects of school choice without recourse to vertical differentiation is a unique contribution of this paper. We argue that schools in metropolitan areas with short ways to school and many potential students face fiercer competition which increases school productivity and student performance. This result confirms the findings in Hoxby (2000). Overall learning time in school is constant in the probability that students behave well if students are segregated by type. However, better behaved students have a higher achievement due to higher optimum resource spending. Finally, we support our argument by an empirical analysis of student performance in various matura schools in Switzerland.
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