Nearly-efficient tuitions and subsidies in American public higher education

Samuel Burer and Gary Fethke

Economics of Education Review, 2016, vol. 55, issue C, 182-197

Abstract: A two-stage setting for determining subsidies and tuitions in a public university context is developed where fixed costs introduce an efficiency-enhancing role for taxpayer-financed appropriations. The optimal subsidy per enrollment is shown to be proportional to students’ maximum net willingness to pay. This result extends a well-known result associated with Ramsey pricing to include endogenous appropriations to public higher education. Realistic restrictions are imposed on the subsidy structure, and scenarios for determining tuitions are addressed and illustrated numerically, using budget data for the University of Iowa and the University of Michigan.

Keywords: Higher education finance; Resident and nonresident tuitions; Subsidies; Welfare transfers (search for similar items in EconPapers)
JEL-codes: D61 I22 I28 L38 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecoedu:v:55:y:2016:i:c:p:182-197

DOI: 10.1016/j.econedurev.2016.09.003

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