The Emergence of For-Profit Higher Education Institutions

Julien Jacqmin

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the market conditions that facilitate the entry of for-profit institutions into the higher education market. I show how, despite significant government financial support for public institutions, for-profit institutions may still find it profitable to enter the market. They do so by spending large amounts of money on advertising campaigns in order to attract students who are relatively more influenced by the persuasive effect of advertising. I show that entry is more likely the more government subsidies are targeted directly toward students, as opposed to institutions. Even if it decreases social welfare, the introduction of market conditions that are friendly to for-profit universities will allow a government to fulfill its objective of increasing participation in the higher education system.

Keywords: For-profit higher education institutions; competition; entry; advertising; mixed duopoly (search for similar items in EconPapers)
JEL-codes: I20 I23 I28 L3 L30 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-com and nep-edu
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:59299

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