Funding Mechanisms for Higher Education: A Marketing Perspective

33 Pages Posted: 26 Apr 2019 Last revised: 12 May 2019

See all articles by Daniel Halbheer

Daniel Halbheer

HEC Paris - Marketing

Gila E. Fruchter

Bar-Ilan University - Graduate School of Business Administration

Eitan Gerstner

Technion-Israel Institute of Technology - The William Davidson Faculty of Industrial Engineering & Management

Thomas Reutterer

Vienna University of Economics and Business - Department of Marketing

Date Written: April 26, 2019

Abstract

This paper develops an analytical model to investigate the impact of governmental funding of higher education on educational outcomes including tuition, graduation rates, and enrollment. Assuming that students make an enrollment decision based on tuition, graduation rate, and labor market prospects, we show that push and pull funding strategies are equally effective in lowering net tuition and in increasing enrollment, the expected graduation rate, and social welfare without compromising the academic standards. We also show that a policy change from enrollment-based funding to performance-based funding raises graduation rates but does not necessarily improve the performance of the education system.

Keywords: Marketing university education, tuition crisis, push and pull funding, probabilistic service, performance-based funding

Suggested Citation

Halbheer, Daniel and Fruchter, Gila E. and Gerstner, Eitan and Reutterer, Thomas, Funding Mechanisms for Higher Education: A Marketing Perspective (April 26, 2019). HEC Paris Research Paper, No. MKG-2019-1329. Available at SSRN: https://ssrn.com/abstract=3377734 or http://dx.doi.org/10.2139/ssrn.3377734

Daniel Halbheer (Contact Author)

HEC Paris - Marketing ( email )

Paris
France

Gila E. Fruchter

Bar-Ilan University - Graduate School of Business Administration ( email )

Ramat Gan
Israel

Eitan Gerstner

Technion-Israel Institute of Technology - The William Davidson Faculty of Industrial Engineering & Management ( email )

Haifa 32000
Israel

Thomas Reutterer

Vienna University of Economics and Business - Department of Marketing ( email )

Augasse 2-6
Vienna, A-1090
Austria

HOME PAGE: http://www.wu-wien.ac.at/handel/mitarbeit/reutterer

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