higher education , migration , fiscal externality , club good , tuition
Abstract:
A simple Tiebout model is presented where states provide university education to both immobile and mobile students. State governments choose the quality of public universities by trading off the value of education for the local immobile student population and the costs, net of tuition revenues, of running the university. The quality of education and the assignment of students to universities in an effcient allocation are characterised. It is shown that decentralised decisions result in effcient choices if states are allowed to choose tuition levels freely. If tuition is capped, ineffciently low qualities are likely to arise.
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