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Funding Mechanisms for Higher Education: A Marketing Perspective

Author

Listed:
  • Halbheer, Daniel

    (HEC Paris)

  • Fruchter, Gila E.

    (Bar-Ilan University - Graduate School of Business Administration)

  • Gerstner, Eitan

    (Technion-Israel Institute of Technology - The William Davidson Faculty of Industrial Engineering & Management)

  • Reutterer, Thomas

    (Vienna University of Economics and Business - Department of Marketing)

Abstract

This paper develops an analytical model to investigate the impact of governmental funding of higher education on educational outcomes including tuition, graduation rates, and enrollment. Assuming that students make an enrollment decision based on tuition, graduation rate, and labor market prospects, we show that push and pull funding strategies are equally effective in lowering net tuition and in increasing enrollment, the expected graduation rate, and social welfare without compromising the academic standards. We also show that a policy change from enrollment-based funding to performance-based funding raises graduation rates but does not necessarily improve the performance of the education system.

Suggested Citation

  • Halbheer, Daniel & Fruchter, Gila E. & Gerstner, Eitan & Reutterer, Thomas, 2019. "Funding Mechanisms for Higher Education: A Marketing Perspective," HEC Research Papers Series 1329, HEC Paris.
    • Handle: RePEc:ebg:heccah:1329
    DOI: 10.2139/ssrn.3377734
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    More about this item

    Keywords

    Marketing university education; tuition crisis; push and pull funding; probabilistic service; performance-based funding;
    All these keywords.

    JEL classification:

    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General

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