European Business Schools Librarian's Group
HEC Research Papers Series,
HEC Paris
No 1329: Funding Mechanisms for Higher Education: A Marketing Perspective
Daniel Halbheer (), Gila E. Fruchter, Eitan Gerstner and Thomas Reutterer
Additional contact information
Daniel Halbheer: HEC Paris
Gila E. Fruchter: Bar-Ilan University - Graduate School of Business Administration
Eitan Gerstner: Technion-Israel Institute of Technology - The William Davidson Faculty of Industrial Engineering & Management
Thomas Reutterer: Vienna University of Economics and Business - Department of Marketing
Abstract: This paper develops an analytical model to investigate the impact of governmental funding of higher education on educational outcomes including tuition, graduation rates, and enrollment. Assuming that students make an enrollment decision based on tuition, graduation rate, and labor market prospects, we show that push and pull funding strategies are equally effective in lowering net tuition and in increasing enrollment, the expected graduation rate, and social welfare without compromising the academic standards. We also show that a policy change from enrollment-based funding to performance-based funding raises graduation rates but does not necessarily improve the performance of the education system.
Keywords: Marketing university education; tuition crisis; push and pull funding; probabilistic service; performance-based funding
JEL-codes: M30
33 pages, April 26, 2019
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