SPATIAL COMPETITION AND THE PRICE OF COLLEGE

Daniel McMillen (), Larry D. Singell and Glen Waddell ()

Economic Inquiry, 2007, vol. 45, issue 4, pages 817-833

Abstract: "This article provides the first evidence that universities compete directly on price, and that the market for students depends on the proximity of competitors. Exploiting detailed data from private U.S. universities, price competition is tested by introducing geographic proximity into a spatial-autoregressive tuition model. Standard spatial models show that list and net tuition are inversely related to distance between institutions, consistent with price competition in higher education. An extension to the spatial-econometrics literature relaxes a constraint that estimated spatial relationships are common across all observations, implying that spatial effects differ across qualitative classes of institutions". ("JEL "C21, I2, L11) Copyright 2007 Western Economic Association International.

Date: 2007
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