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Welfare effects of subsidizing higher education when access and quality are endogenous

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  • Fethke, Gary

Abstract

Tuition and product quality are determined in cases where subsidies offset inefficiencies. Lower subsidies imply a tradeoff between access and quality. For all quality levels, social welfare increases in the subsidy whenever tuition exceeds the marginal cost.

Suggested Citation

  • Fethke, Gary, 2011. "Welfare effects of subsidizing higher education when access and quality are endogenous," Economics Letters, Elsevier, vol. 112(1), pages 45-48, July.
    • Handle: RePEc:eee:ecolet:v:112:y:2011:i:1:p:45-48
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    References listed on IDEAS

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    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    2. K. Sridhar Moorthy, 1988. "Product and Price Competition in a Duopoly," Marketing Science, INFORMS, vol. 7(2), pages 141-168.
    3. Lowry, Robert C., 2001. "The effects of state political interests and campus outputs on public university revenues," Economics of Education Review, Elsevier, vol. 20(2), pages 105-119, April.
    4. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    5. Michael Rizzo & Ronald G. Ehrenberg, 2004. "Resident and Nonresident Tuition and Enrollment at Flagship State Universities," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 303-354, National Bureau of Economic Research, Inc.
    6. McDuff, DeForest, 2007. "Quality, tuition, and applications to in-state public colleges," Economics of Education Review, Elsevier, vol. 26(4), pages 433-449, August.
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    Cited by:

    1. Wei-Bin Zhang, 2016. "Impact of Education Subsidies and Taxation on Wealth and Human Capital Accumulation," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 2(3), pages 222-247.

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    Keywords

    Tuition Quality Subsidy Welfare;

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