Spatial competition and the price of college

Daniel P. McMillen, Larry D. Singell, Glen R. Waddell

Research output: Contribution to journalArticlepeer-review

Abstract

This article provides the first evidence that universities compete directly on price, and that the market for students depends on the proximity of competitors. Exploiting detailed data from private U.S. universities, price competition is tested by introducing geographic proximity into a spatial-autoregressive tuition model. Standard spatial models show that list and net tuition are inversely related to distance between institutions, consistent with price competition in higher education. An extension to the spatial-econometrics literature relaxes a constraint that estimated spatial relationships are common across all observations, implying that spatial effects differ across qualitative classes of institutions. (JEL C21, I2, L11)

Original languageEnglish (US)
Pages (from-to)817-833
Number of pages17
JournalEconomic Inquiry
Volume45
Issue number4
DOIs
StatePublished - Oct 2007
Externally publishedYes

ASJC Scopus subject areas

  • General Business, Management and Accounting
  • Economics and Econometrics

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