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Aftermarket Frictions and the Cost of Off-Platform Options in Centralized Assignment Mechanisms

Author

Listed:
  • Adam Kapor

    (Princeton University)

  • Mohit Karnani

    (MIT)

  • Christopher Neilson

    (Princeton University)

Abstract

We study the welfare and human-capital impacts of the configuration of on- and off-platform options in the context of Chile’s centralized higher education platform, leveraging administrative data and two policy changes: the introduction of a large scholarship program, and an expansion of the number of on-platform slots by approximately 40%. We first show that more programs’ joining the platform led students to start college sooner and raised the share of students who graduated on time. We then develop a model of college applications, offers, waitlists, and matriculation choices, which we estimate using students’ ranked-ordered applications, on- and off-platform enrollment, and on-time graduation outcomes. When more programs join the platform, welfare increases, and the extent of aftermarket frictions matters less for welfare, enrollment, and graduation rates. High-SES students have greater access to off-platform options, and gains from platform expansion are larger for students from lower-SES backgrounds. Our results indicate that expanding the scope of a higher education platform can have real impacts on welfare and human capital.

Suggested Citation

  • Adam Kapor & Mohit Karnani & Christopher Neilson, 2022. "Aftermarket Frictions and the Cost of Off-Platform Options in Centralized Assignment Mechanisms," Working Papers 2022-24, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2022-24
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    File URL: https://christopherneilson.github.io/work/documents/Platforms/platform_externalities.pdf
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    Cited by:

    1. Machado, Cecilia & Szerman, Christiane, 2021. "Centralized college admissions and student composition," Economics of Education Review, Elsevier, vol. 85(C).
    2. Michela Tincani & Fabian Kosse & Enrico Miglino, 2022. "The Effect of Preferential Admissions on the College Participation of Disadvantaged Students: The Role of Pre-College Choices," Working Papers 2022-034, Human Capital and Economic Opportunity Working Group.
    3. Nikhil Agarwal & Eric Budish, 2021. "Market Design," NBER Working Papers 29367, National Bureau of Economic Research, Inc.
    4. Mariana Laverde & Elton Mykerezi & Aaron Sojourner & Aradhya Sood, 2023. "Gains from Reassignment: Evidence from A Two-Sided Teacher Market," Upjohn Working Papers 23-392, W.E. Upjohn Institute for Employment Research.
    5. Tincani, Michela M. & Kosse, Fabian & Miglino, Enrico, 2022. "The Effect of Preferential Admissions on the College Participation of Disadvantaged Students: The Role of Pre-College Choices," Rationality and Competition Discussion Paper Series 342, CRC TRR 190 Rationality and Competition.
    6. Akbarpour, Mohammad & Kapor, Adam & Neilson, Christopher & van Dijk, Winnie & Zimmerman, Seth, 2022. "Centralized School choice with unequal outside options," Journal of Public Economics, Elsevier, vol. 210(C).
    7. Tincani, Michela M. & Kosse, Fabian & Miglino, Enrico, 2022. "The Effect of Preferential Admissions on the College Participation of Disadvantaged Students: The Role of Pre-College Choices," IZA Discussion Papers 15633, Institute of Labor Economics (IZA).
    8. Michela Maria Tincani & Fabian Kosse & Enrico Miglino, 2022. "The Effect of Preferential Admissions on the College Participation of Disadvantaged Students: The Role of Pre-College Choices," CESifo Working Paper Series 10020, CESifo.

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    More about this item

    Keywords

    Chile; On-platform options; Off-platform options; College; Education; Mechanism Design; Off Platform Design; College Admissions; College Enrollment;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I20 - Health, Education, and Welfare - - Education - - - General
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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