Deregulation and Customer Relationship in Higher Education

21 Pages Posted: 15 Feb 2006

See all articles by Gerald Eisenkopf

Gerald Eisenkopf

University of Konstanz - Faculty of Economics and Statistics

Date Written: February 20, 2007

Abstract

This paper analyzes the impact of deregulation policies in higher education on requirements for student input. Requirements decline if universities can choose the level of tuition fees (autonomous fees). If regulations keep tuition fees artificially low (regulated fees) or allow low ability students into higher education, universities increase requirements to deter undesired students. In a duopoly with regulated fees two ex-ante identical universities have identical requirements. Autonomous fee setting induces product differentiation. One university chooses high requirements and low tuition fees, the competitor low requirements and high fees.

The paper provides explanations for price-cost ratios in American universities, the differences in the industrial organization of higher education in the US and Europe respectively and the existence of profitable private universities with relatively low academic standards.

Keywords: Higher Education, Education Policy, University Competition, Tuition Fees, Admission Standards

JEL Classification: I22, I28, J24, L51

Suggested Citation

Eisenkopf, Gerald, Deregulation and Customer Relationship in Higher Education (February 20, 2007). Available at SSRN: https://ssrn.com/abstract=881560 or http://dx.doi.org/10.2139/ssrn.881560

Gerald Eisenkopf (Contact Author)

University of Konstanz - Faculty of Economics and Statistics ( email )

Universitaetsstr. 10
78457 Konstanz
Germany

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