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Promoting School Competition Through School Choice: A Market Design Approach

Author

Listed:
  • John William Hatfield

    (Graduate School of Business Stanford University)

  • Fuhito Kojima

    (Department of Economics Stanford University)

  • Yusuke Narita

    (Department of Economics MIT)

Abstract

We study the effect of different school choice mechanisms on schools' incentives for quality improvement. To do so, we introduce the following criterion: A mechanism respects improvements of school quality if each school becomes weakly better whenever that school improves and thereby becomes more preferred by students. We first show that no stable mechanism, or mechanism that is Pareto efficient for students (such as the Boston and top trading cycles mechanisms), respects improvements of school quality. Nevertheless, for large school districts, we demonstrate that any stable mechanism approximately respects improvements of school quality; by contrast, the Boston and top trading cycles mechanisms fail to do so. Thus a stable mechanism may provide better incentives for schools to improve themselves than the Boston and top trading cycles mechanisms.

Suggested Citation

  • John William Hatfield & Fuhito Kojima & Yusuke Narita, 2012. "Promoting School Competition Through School Choice: A Market Design Approach," Discussion Papers 12-036, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:12-036
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    File URL: http://www-siepr.stanford.edu/repec/sip/12-036.pdf
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    References listed on IDEAS

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    Cited by:

    1. Afacan, Mustafa Oǧuz, 2016. "Enrollment manipulations in school choice," Journal of Mathematical Economics, Elsevier, vol. 63(C), pages 119-125.
    2. Scott Duke Kominers & Tayfun Sönmez, 2012. "Designing for Diversity: Matching with Slot-Specific Priorities," Boston College Working Papers in Economics 806, Boston College Department of Economics.

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