Economics of Higher Education: Micro Analysis of Private Colleges in Nagaland

Abstract

Nagaland (India) presently has 36 colleges. Of them, 28 are private and 8 are government colleges. Private colleges enroll 14000 students and thus serve over 80 percent of the customers of college-level higher education. The market share of private colleges is increasing over time, while the market share of govt. colleges is decreasing. Production function of private college industry indicates that it is a labour-intensive industry with a good substitutability of labour to capital. These colleges make a monopolistic competition market, bordering on oligopoly. Four bands of prices (fees) are observed. The mark-up of prices (fees) over average cost varies between 187 to 5 percent. Colleges enjoying cost and location advantages mark up fees much higher, but there is no significant relationship between academic performance and pricing of services.

Keywords: : Nagaland, India, Private colleges, monopolistic competition, oligopoly, Higher education industry, academic performance, moral hazards, production function, Price bands, labour-intensive, location, cost advantage.

JEL Classification: D4, I21