Working Paper: NBER ID: w23360
Authors: Dennis Epple; Richard Romano; Sinan Sarpa; Holger Sieg; Melanie Zaber
Abstract: The main purpose of this paper is to estimate an equilibrium model of private and public school competition that can generate realistic pricing patterns for private universities in the U.S. We show that the parameters of the model are identified and can be estimated using a semi-parametric estimator given data from the NPSAS. We find substantial price discrimination within colleges. We estimate that a $10,000 increase in family income increases tuition at private schools by on average $210 to $510. A one standard deviation increase in ability decreases tuition by approximately $920 to $1,960 depending on the selectivity of the college. Discounts for minority students range between $110 and $5,750.
Keywords: Market Power; Price Discrimination; Higher Education
JEL Codes: H52; I2; L3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Family income (D31) | Tuition pricing (D49) |
| Student ability (G53) | Tuition pricing (D49) |
| Minority status (J15) | Tuition pricing (D49) |