Competition among universities: The role of preferences for research and government finance

Abstract

We build on previous results to explore the effect of student mobility on university behaviour. Our results suggest that, if universities do not care for research, they do not react to increased competition when students are able to choose where to study. Further, neither do they react to the incentives provided by the government through the financing scheme. Preferences for research thus turn out to be the key element for success of policies which aim at (i) enhancing competition in the higher education sector and (ii) affecting resulting levels of education quality and research through incentives provided by the financing scheme. Classification-JEL : L3, I22.university competition, higher education finance.