IDEAS home Printed from https://ideas.repec.org/p/udg/wpeudg/012.html
   My bibliography  Save this paper

Prices versus Exams as Strategic Instruments for Competing Universities

Author

Listed:
  • del Rey, Elena
  • Romero, Laura

Abstract

In this paper we investigate the optimal choice of prices and/or exams by universities in the presence of credit constraints. We first compare the optimal behavior of a public, welfare maximizing, monopoly and a private, profit maximizing, monopoly. Then we model competition between a public and a private institution and investigate the new role of exams/prices in this environment. We find that, under certain circumstances, the public university may have an interest to rise tuition fees from minimum levels if it cares for global welfare. This will be the case provided that (i) the private institution has higher quality and uses only prices to select applicants, or (ii) the private institution has lower quality and uses also exams to select students. When this is the case, there are efficiency grounds for raising public prices.

Suggested Citation

  • del Rey, Elena & Romero, Laura, 2004. "Prices versus Exams as Strategic Instruments for Competing Universities," Working Papers of the Department of Economics, University of Girona 12, Department of Economics, University of Girona.
    • Handle: RePEc:udg:wpeudg:012
    as

    Download full text from publisher

    File URL: http://www3.udg.edu/fcee/economia/n12.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Raquel Fernandez, 1998. "Education and Borrowing Constraints: Tests vs. Prices," NBER Working Papers 6588, National Bureau of Economic Research, Inc.
    2. Romero, Laura & Rey, Elena del, 2004. "Competition between public and private universities: quality, prices and exams," UC3M Working papers. Economics we046423, Universidad Carlos III de Madrid. Departamento de Economía.
    3. Grilo, I., 1994. "Mixed duopoly under vertical differentiation," LIDAM Reprints CORE 1115, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Robert J. Gary-Bobo & Alain Trannoy, 2005. "Efficient Tuition & Fees, Examinations, and Subsidies," IDEP Working Papers 0501, Institut d'economie publique (IDEP), Marseille, France, revised 01 Mar 2005.
    5. Cremer, Helmuth & Marchand, Maurice & Thisse, Jacques-Francois, 1991. "Mixed oligopoly with differentiated products," International Journal of Industrial Organization, Elsevier, vol. 9(1), pages 43-53, March.
    6. de Fraja, Giovanni & Delbono, Flavio, 1990. "Game Theoretic Models of Mixed Oligopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 4(1), pages 1-17.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guilhem Lecouteux & Léonard Moulin, 2013. "From welfare to preferences, do decision flaws matter? The case of tuition fees," Working Papers hal-00807687, HAL.
    2. Romero, Laura & Rey, Elena del, 2004. "Competition between public and private universities: quality, prices and exams," UC3M Working papers. Economics we046423, Universidad Carlos III de Madrid. Departamento de Economía.
    3. Guilhem Lecouteux & Léonard Moulin, 2015. "To gain or not to lose? Tuition fees for loss averse students," Economics Bulletin, AccessEcon, vol. 35(2), pages 1005-1019.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tomori, Françeska, 2018. "Mixed Duopoly in Education with Vouchers," Working Papers 2072/306548, Universitat Rovira i Virgili, Department of Economics.
    2. Benassi, Corrado & Castellani, Massimiliano & Mussoni, Maurizio, 2016. "Price equilibrium and willingness to pay in a vertically differentiated mixed duopoly," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 86-96.
    3. Pedro Pita Barros & Xavier Martinez‐Giralt, 2002. "Public and Private Provision of Health Care," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(1), pages 109-133, March.
    4. Del Rey Elena & Estevan Fernanda, 2020. "Assessing Higher Education Policy in Brazil: A Mixed Oligopoly Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(1), pages 1-16, January.
    5. Becchetti, Leonardo & Palestini, Arsen & Solferino, Nazaria & Elisabetta Tessitore, M., 2014. "The socially responsible choice in a duopolistic market: A dynamic model of “ethical product” differentiation," Economic Modelling, Elsevier, vol. 43(C), pages 114-123.
    6. Jie Shuai, 2017. "A comment on mixed oligopoly spatial model: the non-uniform consumer distribution," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(1), pages 57-63, April.
    7. repec:ebl:ecbull:v:8:y:2006:i:1:p:1-10 is not listed on IDEAS
    8. Rim Lahmandi‐Ayed & Hejer Lasram & Didier Laussel, 2021. "Is partial privatization of universities a solution for higher education?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(6), pages 1174-1198, December.
    9. Laine, Liisa T. & Ma, Ching-to Albert, 2017. "Quality and competition between public and private firms," Journal of Economic Behavior & Organization, Elsevier, vol. 140(C), pages 336-353.
    10. Ishida, Junichiro & Matsushima, Noriaki, 2009. "Should civil servants be restricted in wage bargaining? A mixed-duopoly approach," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 634-646, April.
    11. De Donder, Philippe & Roemer, John E., 2009. "Mixed oligopoly equilibria when firms' objectives are endogenous," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 414-423, May.
    12. Ali Dadpay, 2020. "An Analysis of Fuel Smuggling in the Middle East as a Single Multinational Market," Journal of Industry, Competition and Trade, Springer, vol. 20(4), pages 643-656, December.
    13. Kangsik Choi & Yuanzhu Lu, 2009. "A Model Of Endogenous Payoff Motives And Endogenous Timing In A Mixed Duopoly," Australian Economic Papers, Wiley Blackwell, vol. 48(3), pages 203-223, September.
    14. Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2020. "Partial privatization in an international mixed oligopoly under product differentiation," Journal of Economics, Springer, vol. 131(1), pages 77-100, September.
    15. Grassi, Simona & Ma, Ching-to Albert, 2011. "Optimal public rationing and price response," Journal of Health Economics, Elsevier, vol. 30(6), pages 1197-1206.
    16. Prabal Roy chowdhury, 2009. "Mixed Oligopoly with Distortions: First Best with Budget-balance and the Irrelevance Principle," Economics Bulletin, AccessEcon, vol. 29(3), pages 1873-1888.
    17. repec:ebl:ecbull:v:18:y:2007:i:2:p:1-11 is not listed on IDEAS
    18. Feifei Qin & Xiaoning Zhang & Eoin Plant, 2017. "The welfare effects of nationalization in a mixed duopoly public transport market," Operational Research, Springer, vol. 17(2), pages 593-618, July.
    19. Stefan Lutz & Mario Pezzino, 2010. "Mixed oligopoly, vertical product differentiation and fixed qualitydependent costs," Economics Discussion Paper Series 1015, Economics, The University of Manchester.
    20. Lambertini, Luca & Tampieri, Alessandro, 2015. "Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly," Economic Modelling, Elsevier, vol. 50(C), pages 40-48.
    21. Anderson, Simon P. & de Palma, Andre & Thisse, Jacques-Francois, 1997. "Privatization and efficiency in a differentiated industry," European Economic Review, Elsevier, vol. 41(9), pages 1635-1654, December.

    More about this item

    Keywords

    Analysis of Education;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:udg:wpeudg:012. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Germà Coenders (email available below). General contact details of provider: https://edirc.repec.org/data/deudges.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.