University Behavior under Borrowing Constraints: The Effect of Students' Abilities Distribution
DOI:
https://doi.org/10.47743/saeb-2021-0008Keywords:
triangular distribution of abilities, borrowing constraints, education quality, tuition feesAbstract
The interaction between a university and potential students is examined under the assumptions of financial constraints and of students' abilities following the pattern of a triangular distribution. Subsequently, a comparative statics analysis in terms of welfare and vectors composed of three components – namely quality, tuition fee and ability threshold – is provided. Results suggest that the mode of the distribution is an intrinsic part of equilibria, and that a human capital maximizing university makes additional efforts in terms of pricing and non-pricing strategies in order to alleviate the inconveniences arising due to financial constraints and non-uniformity in the distribution of students' abilities.
JEL Codes - D42; H42; I21; I22References
Caner, A., and Okten, C., 2013. Higher education in Turkey: Subsidizing the rich or the poor? Economics of Education Review, 35, 75-92. http://dx.doi.org/10.1016/j.econedurev.2013.03.007
Clotfelter, C. T., 1999. The Familiar but Curious Economics of Higher Education: Introduction to a Symposium. The Journal of Economic Perspectives, 13(1), 3-12. http://dx.doi.org/10.1257/jep.13.1.3
Dearden, L., Fitzsimons, E., and Wyness, G., 2011. The Impact of Tuition Fees and Support on University Participation in the UK. IFS Working Paper, W11/17. http://dx.doi.org/10.1920/wp.ifs.2011.1117
Dill, D. D., 2005. The Public Good, the Public Interest and Public Higher Education. University of Carolina at Chapel Hill Working Paper.
Epple, D., Romano, R., and Sieg, H., 2006. Admission, Tuition, and Financial Aid Policies in the Market for Higher Education. Econometrica, 74(4), 885-928. http://dx.doi.org/10.1111/j.1468-0262.2006.00690.x
Fernández, R., 1998. Education and Borrowing Constraints: Tests vs. Prices. NBER Working Paper, w6588.
Friebel, G., and Maldonado, D., 2015. Is it Always Good to Let Universities Select Their Students? Revue économique, 66(1), 219-235. http://dx.doi.org/10.3917/reco.661.0219
Hazelkorn, E., and Gibson, A., 2019. Public goods and public policy: What is public good, and who and what decides? Higher Education, 78, 257-271. http://dx.doi.org/10.1007/s10734-018-0341-3
Klemencic, M., Scukanec, N., and Komljenovic, J., 2015. Decisions Support Issues in Central and Eastern Europe. In K. L. Webber and A. J. Calderon (Eds.), Institutional Research and Planning in Higher Education: Global Themes and Context: Routledge/Taylor & Francis.
Levy, D., 2005. Legitimacy and Private Higher Education in Eastern Europe. Industry and Higher Education, 38(jun.). http://dx.doi.org/10.6017/ihe.2005.38.7464
Lutran, J., 2007. Private Higher Education in Western Europe: Hellenic Colleges Association.
Morley, L., Leach, F., and Lugg, R., 2009. Democratising higher education in Ghana and Tanzania: Opportunity structures and social inequalities. International Journal of Educational Development, 29(1), 56-64. http://dx.doi.org/10.1016/j.ijedudev.2008.05.001
Radic, M. N., and Paleka, H., 2020. Higher Education Funding and Economic Growth: Empirical Evidence from Croatia. Scientific Annals of Economics and Business, 67(3), 409-421.
Romero, L., 2005. On the role of borrowing constraints in public and private universities' choices. Economic Bulletin, 9(6), 1-8.
Romero, L., and Del Rey, E., 2004. Competition between public and private universities: quality, prices and exams. UC3M Working papers.
Rothschild, M., and White, J. W., 1995. The Analytics of the Pricing of Higher Education and Other Services in Which the Customers Are Inputs. Journal of Political Economy, 103(3), 573-586. http://dx.doi.org/10.1086/261995
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2021 SCIENTIFIC ANNALS OF ECONOMICS AND BUSINESS

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
All accepted papers are published on an Open Access basis.
The Open Access License is based on the Creative Commons license.
The non-commercial use of the article will be governed by the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License as currently displayed on https://creativecommons.org/licenses/by-nc-nd/4.0
Under the Creative Commons Attribution-NonCommercial-NoDerivatives license, the author(s) and users are free to share (copy, distribute and transmit the contribution) under the following conditions:
1. they must attribute the contribution in the manner specified by the author or licensor,
2. they may not use this contribution for commercial purposes,
3. they may not alter, transform, or build upon this work.