Universities' competition under dual tuition system

Economics Bulletin. 2017. Vol. 37. No. 3. P. 2122–2132.

Fridman A., Verbetsky A.

The paper proposes a model of strategic interaction of universities under dual tuition system used in Russia, where universities combine the state-financed enrollment provided for free with the enrollment in excess of state quota provided at paid basis. It is demonstrated that the impact of state-financed higher education expenditures on the education quality and tuition depends on the choice of the policy instrument: an increase in per student subsidy under the same total quota improves education quality and raises tuition fee while an increase in quota under the same per student allotment reduces both education quality and tuition fees. It is also demonstrated that both policies have positive impact on total enrollment but do not necessarily result in social welfare improvement.

Keywords: высшее образование, конкуренция, государственное финансирование, financing of higher education, state-financed quota, strategic competition