A Low-Subsidy Problem in Public Higher Education

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  • Author(s): Fethke, Gary
  • Language:
    English
  • Source:
    Economics of Education Review. Aug 2011 30(4):617-626.
  • Physical Description:
    PDF
  • Publication Date:
    2011
  • Document Type:
    Journal Articles
    Reports - Evaluative
  • Additional Information
    • Availability:
      Elsevier. 6277 Sea Harbor Drive, Orlando, FL 32887-4800. Tel: 877-839-7126; Tel: 407-345-4020; Fax: 407-363-1354; e-mail: [email protected]; Web site: http://www.elsevier.com
    • Peer Reviewed:
      Y
    • Source:
      10
    • Education Level:
      Higher Education
      Postsecondary Education
    • Subject Terms:
      Income; Educational Finance; Tuition; Public Colleges; State Government; State Aid; Administrative Policy; Economic Factors; Educational Policy; Policy Analysis; Costs
    • Accession Number:
      10.1016/j.econedurev.2011.01.003
    • ISSN:
      0272-7757
    • Abstract:
      With an exogenous public subsidy and a break-even restriction on university net revenue, tuition discrimination supports a quasi-efficient departure from marginal-cost pricing. In contrast, when the legislature and university interact in their subsidy and tuition decisions, the public subsidy becomes endogenous. With an endogenous public subsidy, support by legislatures is affected by the same factors that influence tuition; this leads to a situation where higher tuition revenue is accompanied by a lower public subsidy. The welfare of students declines when this "low-subsidy" case develops. The university's ability to address this issue depends on its being able to commit to a tuition policy, and credible commitment appears consistent with existing institutional conditions.
    • Abstract:
      As Provided
    • Publication Date:
      2011
    • Accession Number:
      EJ927254