Peer Group and Distance: When Widening University Participation is Better

Berardino Cesi () and Dimitri Paolini

Manchester School, 2014, vol. 82, 110-132

Abstract: type="main">

We study the effect of a new university in a two-city model in which individuals’ utility depends on own ability, peer group ability, formal education and mobility costs. We compare a monopoly (one university in one city) with a two-university system (one university in each city). Introducing the second university improves welfare when the fixed cost of each university is low. With two universities, we obtain a symmetric equilibrium for every mobility cost and asymmetric equilibria for low mobility costs. The symmetric system induces the highest welfare and is also Strong Nash (for high mobility costs).

Date: 2014
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Working Paper: Peer group and distance: when widening university participation is better (2012)
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