Competition in the Public School Sector: Evidence on Strategic Interaction Among US School Districts
Posted: 21 Apr 2008
Abstract
This paper provides evidence on strategic interaction among local school districts. The analysis makes use of a significant change in the institutional environment for school districts in Michigan in 1996, when the state established a voluntary inter-district choice program. The school districts' participation decisions are modelled as discrete choice decisions using a spatial latent variable model. Strong effects are found saying that lagged adoptions of neighbors positively affect the current probability of participation. A simple test exploiting limitations of student mobility in inter-district transfers suggests that the driving force for interdependencies among adoption decisions was competition for students.
Keywords: Strategic interaction, school districts, school choice, spatial probit
JEL Classification: D78, H77
Suggested Citation: Suggested Citation