University Competition and Transnational Education: The Choice of Branch Campus

Joanna Poyago-Theotoky and Alessandro Tampieri

Working Paper series from Rimini Centre for Economic Analysis

Abstract: We present a theoretical framework in which an elitist and a non-elitist university in a developed country compete by choosing their admission standards and deciding whether or not to open a branch campus in a developing country. Students from a developing country attend university if either a branch campus is opened or, they can afford to move to the developed country. We characterise the equilibria by focussing on the relationship between the investment costs of a branch campus and the graduate wage. There are three type of equilibria: (i) no branch campus is opened, (ii) only the elitist university opens a branch campus and (iii) both universities engage in transnational education, opening a branch campus. Very high investment costs discourage investment. A rise in the graduate wage increases the incentive for opening a branch campus, although this incentive is stronger for the elitist than the non-elitist university. Surprisingly, a government subsidy for opening a branch campus may be ineffective in ensuring investment by both universities.

Date: 2015-03
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Related works:
Journal Article: University Competition and Transnational Education: The Choice of Branch Campus (2016)
Working Paper: University Competition and Transnational Education: The Choice of Branch Campus (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:15-15

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