University Competition and Transnational Education: The Choice of Branch Campus
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.
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- Adugna Lemi, 2013. "Multilateral agreements and trade in education services: implications for Ethiopia," International Journal of Education Economics and Development, Inderscience Enterprises Ltd, vol. 4(3), pages 255-277.
- Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
- Donald Lien, 2006. "Borderless Education and Domestic Programs," Education Economics, Taylor & Francis Journals, vol. 14(3), pages 297-308. Full references (including those not matched with items on IDEAS)
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