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Universities' competition under dual tuition system

Author

Listed:
  • Alla Fridman

    (National Research University Higher School of Economics)

  • Alexey Verbetsky

    (School of Public Policy, Russian Presidential Academy of National Economy and Public Administration)

Abstract

The paper proposes a model of strategic interaction of universities under dual tuition system used in Russia, where universities combine the state-financed enrollment provided for free with the enrollment in excess of state quota provided at paid basis. It is demonstrated that the impact of state-financed higher education expenditures on the education quality and tuition depends on the choice of the policy instrument: an increase in per student subsidy under the same total quota improves education quality and raises tuition fee while an increase in quota under the same per student allotment reduces both education quality and tuition fees. It is also demonstrated that both policies have positive impact on total enrollment but do not necessarily result in social welfare improvement.

Suggested Citation

  • Alla Fridman & Alexey Verbetsky, 2017. "Universities' competition under dual tuition system," Economics Bulletin, AccessEcon, vol. 37(3), pages 2122-2132.
    • Handle: RePEc:ebl:ecbull:eb-17-00369
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2017/Volume37/EB-17-V37-I3-P192.pdf
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    References listed on IDEAS

    as
    1. Fethke, Gary, 2005. "Strategic determination of higher education subsidies and tuitions," Economics of Education Review, Elsevier, vol. 24(5), pages 601-609, October.
    2. Romero, Laura & Rey, Elena del, 2004. "Competition between public and private universities: quality, prices and exams," UC3M Working papers. Economics we046423, Universidad Carlos III de Madrid. Departamento de Economía.
    3. Barr, Nicholas, 2009. "Financing higher education: lessons from economic theory and reform in England," LSE Research Online Documents on Economics 30873, London School of Economics and Political Science, LSE Library.
    4. Berger, Mark C. & Kostal, Thomas, 2002. "Financial resources, regulation, and enrollment in US public higher education," Economics of Education Review, Elsevier, vol. 21(2), pages 101-110, April.
    5. Frederick, Allison B. & Schmidt, Stephen J. & Davis, Lewis S., 2012. "Federal policies, state responses, and community college outcomes: Testing an augmented Bennett hypothesis," Economics of Education Review, Elsevier, vol. 31(6), pages 908-917.
    6. Gary Fethke, 2006. "Subsidy and Tuition Policies in Public Higher Education," Economic Inquiry, Western Economic Association International, vol. 44(4), pages 644-655, October.
    7. Caroline Minter Hoxby, 2004. "Introduction to "College Choices: The Economics of Where to Go, When to Go, and How to Pay For It"," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 1-12, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Fridman, A. & Verbetskaia, M., 2020. "Government regulation of the market for higher education," Journal of the New Economic Association, New Economic Association, vol. 45(1), pages 12-43.

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    More about this item

    Keywords

    Higher education; educational finance; strategic quality competition; resource allocation;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • I2 - Health, Education, and Welfare - - Education

    Statistics

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