Journal of Economic Perspectives: Vol. 13 No. 1 (Winter 1999)
Print Article Summary Export Citation
Sign up for Email Alerts Follow us on Twitter
Subsidies, Hierarchy and Peers: The Awkward Economics of Higher Education
Winston, Gordon C. 1999. "Subsidies, Hierarchy and Peers: The Awkward Economics of Higher Education." Journal of Economic Perspectives, 13(1): 13-36.
Higher education is an industry where markets don't clear, prices on average cover less than a third of production costs, the resulting student subsidies are given in strikingly different amounts by different schools, creating a sharply hierarchical market. And an input important to production can be bought only from the firm's own customers. This paper describes the resulting structure of costs, prices, subsidies, and hierarchy using an augmented theory of nonprofits and 1995 national data to show their magnitudes and suggest their often significant implications. Public intuition and economic models of firms, industries, and welfare often yield distorted understanding and dubious public policies.
Article Full-Text Access
Full-text Article (Complimentary)
Winston, Gordon C. (Williams College)
I21: Analysis of Education
| Login to post a comment