Choice and Competition in Education Markets

45 Pages Posted: 11 May 2010

See all articles by Patrick J. Bayer

Patrick J. Bayer

Duke University - Department of Economics; National Bureau of Economic Research (NBER)

Robert McMillan

University of Toronto - Department of Economics

Date Written: April 30, 2010

Abstract

This paper presents a new approach for measuring the effects of competition on school performance. We use an equilibrium sorting model to generate an intuitive measure of the competition each school faces, captured by the slope of the school’s demand curve. We then show that this competition measure is positively related to school performance using rich Census data: a one standard-deviation increase in competitiveness leads to a 0.1 standard-deviation performance improvement, controlling for a host of other factors. This positive performance relationship is consistent with strong supply responsiveness, relevant to the school choice debate.

Keywords: Competition, School Choice, Sorting Model, Education Demand, School Performance

JEL Classification: I20, H41, R21

Suggested Citation

Bayer, Patrick J. and McMillan, Robert, Choice and Competition in Education Markets (April 30, 2010). Economic Research Initiatives at Duke (ERID) Working Paper No. 48, Available at SSRN: https://ssrn.com/abstract=1601325 or http://dx.doi.org/10.2139/ssrn.1601325

Patrick J. Bayer (Contact Author)

Duke University - Department of Economics ( email )

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Box 90097
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National Bureau of Economic Research (NBER)

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Robert McMillan

University of Toronto - Department of Economics ( email )

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Toronto, Ontario M5S 3G7
Canada
416-978-4190 (Phone)
416-978-6713 (Fax)

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