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Optimal government subsidies to universities in the face of tuition and enrollment constraints

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  • Stephen Easton
  • Duane Rockerbie

Abstract

This paper develops a simple static model of an imperfectly competitive university operating under government-imposed constraints on the ability to raise tuition fees and increase enrollments. The model has particular applicability to Canadian universities. Assuming an average cost pricing rule, rules for adequate government subsidies (operating grants) are derived under conditions of a forced reduction in tuition fees and limiting the increase in tuition fees in the face of increasing demand. These rules are simple to operationalize and interpret.

Suggested Citation

  • Stephen Easton & Duane Rockerbie, 2008. "Optimal government subsidies to universities in the face of tuition and enrollment constraints," Education Economics, Taylor & Francis Journals, vol. 16(2), pages 191-201.
    • Handle: RePEc:taf:edecon:v:16:y:2008:i:2:p:191-201
    DOI: 10.1080/09645290701761388
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    References listed on IDEAS

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    1. Izadi, Hooshang & Johnes, Geraint & Oskrochi, Reza & Crouchley, Robert, 2002. "Stochastic frontier estimation of a CES cost function: the case of higher education in Britain," Economics of Education Review, Elsevier, vol. 21(1), pages 63-71, February.
    2. Melville L. McMillan & Debasish Datta, 1998. "The Relative Efficiencies of Canadian Universities: A DEA Perspective," Canadian Public Policy, University of Toronto Press, vol. 24(4), pages 485-511, December.
    3. Caballero, Rafael & Galache, Teodoro & Gomez, Trinidad & Molina, Julian & Torrico, Angel, 2004. "Budgetary allocations and efficiency in the human resources policy of a university following multiple criteria," Economics of Education Review, Elsevier, vol. 23(1), pages 67-74, February.
    4. Vaughan Dickson & William J. Milne & David Murrell, 1996. "Who Should Pay for University Education? Some Net Benefit Results by Funding Source for New Brunswick," Canadian Public Policy, University of Toronto Press, vol. 22(4), pages 315-329, December.
    5. Mueller, Richard E. & Rockerbie, Duane, 2005. "Determining demand for university education in Ontario by type of student," Economics of Education Review, Elsevier, vol. 24(4), pages 469-483, August.
    6. Benjamin Levin, 1990. "Tuition Fees and University Accessibility," Canadian Public Policy, University of Toronto Press, vol. 16(1), pages 51-59, March.
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    Cited by:

    1. Hugo Harari-Kermadec & David Flacher, 2011. "Tuition fees, self-esteem and social heterogeneity," Post-Print hal-00566151, HAL.
    2. Rappai, Gábor & Rekettye, Gábor, 2011. "Pricing Policies at Public Universities in Hungary," Apas Papers 350, Academic Public Administration Studies Archive - APAS.

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