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University Competition and Transnational Education: The Choice of Branch Campus

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  • Joanna Poyago-Theotoky

    (Department of Economics and Finance, La Trobe University, Australia; The Rimini Centre for Economic Analysis, Italy)

  • Alessandro Tampieri

    (Faculty of Law, Economics and Finance, University of 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 if either a branch campus is opened or, they can afford to move to the developed country. We characterise the equilibria 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 is opened, (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 discourage investment. 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. Surprisingly, a government subsidy for opening a branch campus may be ineffective in ensuring investment by both universities.

Suggested Citation

  • Joanna Poyago-Theotoky & Alessandro Tampieri, 2015. "University Competition and Transnational Education: The Choice of Branch Campus," Working Paper series 15-15, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:15-15
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    References listed on IDEAS

    as
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    More about this item

    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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