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The Emergence of For-Profit Higher Education Institutions

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  • Jacqmin, Julien

Abstract

This paper examines the market conditions that facilitate the entry of for-profit institutions into the higher education market. I show how, despite significant government financial support for public institutions, for-profit institutions may still find it profitable to enter the market. They do so by spending large amounts of money on advertising campaigns in order to attract students who are relatively more influenced by the persuasive effect of advertising. I show that entry is more likely the more government subsidies are targeted directly toward students, as opposed to institutions. Even if it decreases social welfare, the introduction of market conditions that are friendly to for-profit universities will allow a government to fulfill its objective of increasing participation in the higher education system.

Suggested Citation

  • Jacqmin, Julien, 2014. "The Emergence of For-Profit Higher Education Institutions," MPRA Paper 59299, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:59299
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    File URL: https://mpra.ub.uni-muenchen.de/59299/1/MPRA_paper_59299.pdf
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. For-profit higher education
      by nawmsayn in ZeeConomics on 2014-11-23 19:54:11

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    Cited by:

    1. Paul Belleflamme & Julien Jacqmin, 2016. "An Economic Appraisal of MOOC Platforms: Business Models and Impacts on Higher Education," CESifo Economic Studies, CESifo Group, vol. 62(1), pages 148-169.

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    More about this item

    Keywords

    For-profit higher education institutions; competition; entry; advertising; mixed duopoly;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

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