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Tuition fees and admission standards: how do public and private universities really compete for students?

By Tania Oliveira


We study a market where two universities, a public and a private\ud one, compete for students by setting admission standards. Students\ud di¤er in ability and receive a wage premium for participating in higher\ud education. This wage increases with the quality of the university at-\ud tended. The private university maximizes pro ts, the public university\ud maximizes welfare. We show that there is no same-standard equilib-\ud rium. In a speci c example we show that multiple equilibria can exist.\ud In one equilibrium the private university sets a higher admission stan-\ud dard, and in the other equilibrium the public university sets a higher\ud admission standard

Topics: Competition between private and public universities, edu-
Publisher: Dept. of Economics, University of Leicester
Year: 2006
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