Too Much Competition in Higher Education? Some Conceptual Remarks on the Excessive‐Signaling Hypothesis

Karsten Mause

American Journal of Economics and Sociology, 2009, vol. 68, issue 5, 1107-1133

Abstract: Within the economics of higher education, there is a small but influential literature that describes and analyzes the outcomes of competitive processes on markets for higher educational services. Colleges and universities in the United States currently invest a vast amount of resources in order to attract well‐qualified students. Costly activities like advertising, infrastructure investments, the recruitment of academic stars, or the granting of merit‐based tuition discounts can be interpreted as different forms of “market signaling” in the sense of Spence. According to some social science authors, these signaling activities have reached a dimension that has to be classified as excessive or socially wasteful from a welfare‐economic viewpoint. The present article makes some conceptual remarks on this excessive‐signaling hypothesis, and intends to contribute to the debate about the (potentially) harmful and beneficial effects of competition in higher education.

Date: 2009
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