Permanent Excess Demand as Business Strategy: An Analysis of the Brazilian Higher-Education Market

dc.contributor.authorAndrade, Eduardo de Carvalho
dc.contributor.authorMoita, Rodrigo Menon Simões
dc.contributor.authorSilva, Carlos Eduardo Lobo e
dc.coverage.cidadeSão Paulopt_BR
dc.coverage.paisBrasilpt_BR
dc.creatorAndrade, Eduardo de Carvalho
dc.creatorMoita, Rodrigo Menon Simões
dc.creatorSilva, Carlos Eduardo Lobo e
dc.date.accessioned2023-07-19T15:53:25Z
dc.date.available2023-07-19T15:53:25Z
dc.date.issued2011
dc.description.otherMany Higher Education Institutions (HEIs) establish tuition below the equilibrium price to generate permanent excess demand. This paper first adapts Becker’s (1991) theory to understand why the HEIs price in this way. The fact that students are both consumers and inputs on the education production function gives rise to a market equilibrium, where some firms have excess demand and charge high prices, and others charge low prices and have empty seats. Second, the paper analyzes this equilibrium empirically. We estimate the demand for undergraduate courses in business administration in the state of São Paulo, and show that the quality of the student body is important on the students’ decisions of where to study. The results show that tuition, quality of incoming students and percentage of professors with doctorates are the determining factors of students’ choice. Since student quality determines the demand for a HEI, we calculate how much the HEIs value having better students; that is the total revenue that each HEI gives up to guarantee excess demand. Regarding the “investment” in selectivity, 39 HEIs in São Paulo give up a combined 5 million Reais (or US$ 3.14 million) in revenue per year per freshman class, which means 7.6% of the revenue coming from a freshman class.pt_BR
dc.format.extent30 p.pt_BR
dc.format.mediumDigitalpt_BR
dc.identifier.issueWPE 245/2011
dc.identifier.urihttps://repositorio.insper.edu.br/handle/11224/5859
dc.language.isoInglêspt_BR
dc.publisherInsperpt_BR
dc.publisherIBMEC São Paulopt_BR
dc.relation.ispartofseriesInsper Working Paperpt_BR
dc.rights.licenseO INSPER E ESTE REPOSITÓRIO NÃO DETÊM OS DIREITOS DE USO E REPRODUÇÃO DOS CONTEÚDOS AQUI REGISTRADOS. É RESPONSABILIDADE DO USUÁRIO VERIFICAR OS USOS PERMITIDOS NA FONTE ORIGINAL, RESPEITANDO-SE OS DIREITOS DE AUTOR OU EDITORpt_BR
dc.subject.keywordsHigher Educationpt_BR
dc.subject.keywordsMarket Segmentationpt_BR
dc.subject.keywordsExcess Demandpt_BR
dc.titlePermanent Excess Demand as Business Strategy: An Analysis of the Brazilian Higher-Education Marketpt_BR
dc.typeworking paper
dspace.entity.typePublication
local.subject.cnpqCiências Sociais Aplicadaspt_BR
local.typeWorking Paperpt_BR
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