Public Universities, Tuition and Competition - A Tiebout Model
Center for European Economic Research (ZEW); University of Magdeburg
ZEW - Centre for European Economic Research Discussion Paper No. 07-056
A simple Tiebout model is presented where states provide university education to both immobile and mobile students. State governments choose the quality of public universities by trading off the value of education for the local immobile student population and the costs, net of tuition revenues, of running the university. The quality of education and the assignment of students to universities in an efficient allocation are characterised. It is shown that decentralised decisions result in efficient choices if states are allowed to choose tuition levels freely. If tuition is capped, inefficiently low qualities are likely to arise.
Number of Pages in PDF File: 26
Keywords: higher education, migration, fiscal externality, club good, tuition
JEL Classification: H75, I28, H77working papers series
Date posted: October 22, 2007 ; Last revised: August 26, 2008
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