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Prices versus exams as strategic instruments for competing universities

In this paper we investigate the optimal choice of prices and/or exams by universities in the presence of credit constraints. We first compare the optimal behavior of a public, welfare maximizing, monopoly and a private, profit maximizing, monopoly. Then we model competition between a public and a private institution and investigate the new role of exams/prices in this environment. We find that, under certain circumstances, the public university may have an interest to raise tuition fees from minimum levels if it cares for global welfare. This will be the case provided that (i) the private institution has higher quality and uses only prices to select applicants, or (ii) the private institution has lower quality and uses also exams to select students. When this is the case, there are efficiency grounds for raising public prices

Universitat de Girona. Departament d’Economia

Other contributions: Universitat de Girona. Departament d’Economia
Author: Rey Canteli, Elena del
Romero, Laura
Date: 2004 October
Abstract: In this paper we investigate the optimal choice of prices and/or exams by universities in the presence of credit constraints. We first compare the optimal behavior of a public, welfare maximizing, monopoly and a private, profit maximizing, monopoly. Then we model competition between a public and a private institution and investigate the new role of exams/prices in this environment. We find that, under certain circumstances, the public university may have an interest to raise tuition fees from minimum levels if it cares for global welfare. This will be the case provided that (i) the private institution has higher quality and uses only prices to select applicants, or (ii) the private institution has lower quality and uses also exams to select students. When this is the case, there are efficiency grounds for raising public prices
Format: application/pdf
Citation: Rey, E. del; Romero, L. Prices versus exams as strategic instruments for competing universities. Girona: Universitat de Girona. Departament d’Economia, 2004. (DOcuments de treball, 12). Necessita Adobe Acrobat. Disponible a Internet a: http://hdl.handle.net/10256/285
Other identifiers: DL Gi.472-2002
Document access: http://hdl.handle.net/10256/285
Language: eng
Publisher: Universitat de Girona. Departament d’Economia
Collection: info:eu-repo/semantics/altIdentifier/issn/1579-475X
Rights: Aquest document està subjecte a una llicència Creative Commons: Reconeixement – No comercial – Sense obra derivada (by-nc-nd)
Rights URI: http://creativecommons.org/licenses/by-nc-nd/3.0/deed.ca
Subject: Educació -- Avaluació
Title: Prices versus exams as strategic instruments for competing universities
Type: info:eu-repo/semantics/workingPaper
Repository: DUGiDocs

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