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The Emergence of For-Profit Higher Education Institutions

Author

Listed:
  • Jacqmin, Julien

Abstract

This paper examines the market conditions that facilitate the entry of for-profit institutions into the higher education market. I show how, despite significant government financial support for public institutions, for-profit institutions may still find it profitable to enter the market. They do so by spending large amounts of money on advertising campaigns in order to attract students who are relatively more influenced by the persuasive effect of advertising. I show that entry is more likely the more government subsidies are targeted directly toward students, as opposed to institutions. Even if it decreases social welfare, the introduction of market conditions that are friendly to for-profit universities will allow a government to fulfill its objective of increasing participation in the higher education system.

Suggested Citation

  • Jacqmin, Julien, 2014. "The Emergence of For-Profit Higher Education Institutions," MPRA Paper 59299, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:59299
    as

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    File URL: https://mpra.ub.uni-muenchen.de/59299/1/MPRA_paper_59299.pdf
    File Function: original version
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    References listed on IDEAS

    as
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    4. Lang, Kevin & Weinstein, Russell, 2013. "The wage effects of not-for-profit and for-profit certifications: Better data, somewhat different results," Labour Economics, Elsevier, vol. 24(C), pages 230-243.
    5. David J. Deming & Claudia Goldin & Lawrence F. Katz, 2012. "The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 139-164, Winter.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. For-profit higher education
      by nawmsayn in ZeeConomics on 2014-11-23 19:54:11

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    Cited by:

    1. Paul Belleflamme & Julien Jacqmin, 2016. "An Economic Appraisal of MOOC Platforms: Business Models and Impacts on Higher Education," CESifo Economic Studies, CESifo, vol. 62(1), pages 148-169.

    More about this item

    Keywords

    For-profit higher education institutions; competition; entry; advertising; mixed duopoly;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

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