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Competition, Selectivity and Innovation in the Higher Educational Market

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  • Lynne Pepall
  • Dan Richard

Abstract

Recent innovations in digital learning and web-based technologies have enable scalability in educational services that has previously not been feasible presenting a potential disruption of traditional higher education markets. This paper explores the impact of these innovations in vertically differentiated market with network externalities. Students differ in their ability to benefit from educational services. We describe how selective and non-selective institutions compete for students through tuition price and admission criteria and consider how free non-credentialed educational services (MOOCs) affect the market equilibrium. Our model also helps explain why selective institutions are frequently also the proprietors of MOOCs.

Suggested Citation

  • Lynne Pepall & Dan Richard, 2014. "Competition, Selectivity and Innovation in the Higher Educational Market," Discussion Papers Series, Department of Economics, Tufts University 0782, Department of Economics, Tufts University.
    • Handle: RePEc:tuf:tuftec:0782
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    File URL: http://ase.tufts.edu/economics/documents/papers/2014/sequentialInnovation.pdf
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    Cited by:

    1. Poyago-Theotoky Joanna & Tampieri Alessandro, 2016. "University Competition and Transnational Education: The Choice of Branch Campus," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 16(2), pages 739-766, June.

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    More about this item

    Keywords

    Higher Education; Vertical Differentiation; Network Effects;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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