Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22788
Year of Publication: 
2004
Series/Report no.: 
Volkswirtschaftliche Diskussionsreihe No. 265
Publisher: 
Universität Augsburg, Institut für Volkswirtschaftslehre, Augsburg
Abstract: 
The present paper analyses the behaviour of a university within a neoclassical equilibrium framework. Demand for enrolments is traced back to the decision of potential students which aim at maximizing expected lifetime income. Here, the key factors are the students? preferences and abilities, the quality of education offered by the university and several external determinants like, e.g., tuition fees and differences in income between graduates and non-graduates. In turn, the behaviour of the university in terms of educational efforts and the strength of academic standards depends on the demand for enrolments, on financial resources available and on the specific objectives pursued by the university. The main emphasis is on the implications of different funding mechanism (governmental grants vs. tuition fees) in combination with different objectives pursued (maximizing enrolments vs. maximizing prestige via research output). It is shown that for given financial resources a university that aims at maximizing prestige always provides only a lower quality of education for a smaller number of students compared to a university that aims at maximizing enrolments. Moreover, the effects caused by changes in governmental grants or tuition fees are quite different depending on the university?s objectives. Yet, there is also one common feature: Irrespective of which utility function is maximized, partially substituting governmental grants by tuition fees would change neither educational efforts nor academic standards, but it would inevitably lead to decreasing enrolments. As a positive side-effect, however, the average ability of the remaining population of students would increase.
Subjects: 
Educational Economics
University
Tuition Fees
JEL: 
A2
Document Type: 
Working Paper

Files in This Item:
File
Size
424.02 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.