Permanent demand excess as business strategy: an analysis of the Brazilian higher-education market
Many Higher Education Institutions (HEIs) establish tuition below the equilibrium price to generate permanent demand excess. 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 p...
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| Format: | Article |
| Language: | English |
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Universidade de São Paulo
2015-03-01
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| Series: | RAUSP: Revista de Administração da Universidade de São Paulo |
| Subjects: | |
| Online Access: | http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0080-21072015000100002&lng=en&tlng=en |
| _version_ | 1811215679051792384 |
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| author | Rodrigo Menon Simões Moita Carlos Eduardo Lobo e Silva Eduardo de Carvalho Andrade |
| author_facet | Rodrigo Menon Simões Moita Carlos Eduardo Lobo e Silva Eduardo de Carvalho Andrade |
| author_sort | Rodrigo Menon Simões Moita |
| collection | DOAJ |
| description | Many Higher Education Institutions (HEIs) establish tuition below the equilibrium price to generate permanent demand excess. 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 process 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 estimated the demand for undergraduate courses in Business Administration in the State of São Paulo. The results show that tuition, quality of incoming students and percentage of lecturers holding doctorates degrees are the determining factors of students’ choice. Since the student quality determines the demand for a HEI, it is calculated what the value is for a HEI to get 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 R$ 5 million (or US$ 3.14 million) in revenue per year per freshman class, which means 7.6% of the revenue coming from a freshman class. |
| first_indexed | 2024-04-12T06:26:34Z |
| format | Article |
| id | doaj.art-0028d102c30f4fac94e18956e512d7b8 |
| institution | Directory Open Access Journal |
| issn | 1984-6142 |
| language | English |
| last_indexed | 2024-04-12T06:26:34Z |
| publishDate | 2015-03-01 |
| publisher | Universidade de São Paulo |
| record_format | Article |
| series | RAUSP: Revista de Administração da Universidade de São Paulo |
| spelling | doaj.art-0028d102c30f4fac94e18956e512d7b82022-12-22T03:44:07ZengUniversidade de São PauloRAUSP: Revista de Administração da Universidade de São Paulo1984-61422015-03-0150192510.5700/rausp1181S0080-21072015000100002Permanent demand excess as business strategy: an analysis of the Brazilian higher-education marketRodrigo Menon Simões MoitaCarlos Eduardo Lobo e SilvaEduardo de Carvalho AndradeMany Higher Education Institutions (HEIs) establish tuition below the equilibrium price to generate permanent demand excess. 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 process 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 estimated the demand for undergraduate courses in Business Administration in the State of São Paulo. The results show that tuition, quality of incoming students and percentage of lecturers holding doctorates degrees are the determining factors of students’ choice. Since the student quality determines the demand for a HEI, it is calculated what the value is for a HEI to get 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 R$ 5 million (or US$ 3.14 million) in revenue per year per freshman class, which means 7.6% of the revenue coming from a freshman class.http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0080-21072015000100002&lng=en&tlng=enenseñanza superiorsegmentación de mercadoefecto de pares |
| spellingShingle | Rodrigo Menon Simões Moita Carlos Eduardo Lobo e Silva Eduardo de Carvalho Andrade Permanent demand excess as business strategy: an analysis of the Brazilian higher-education market RAUSP: Revista de Administração da Universidade de São Paulo enseñanza superior segmentación de mercado efecto de pares |
| title | Permanent demand excess as business strategy: an analysis of the Brazilian higher-education market |
| title_full | Permanent demand excess as business strategy: an analysis of the Brazilian higher-education market |
| title_fullStr | Permanent demand excess as business strategy: an analysis of the Brazilian higher-education market |
| title_full_unstemmed | Permanent demand excess as business strategy: an analysis of the Brazilian higher-education market |
| title_short | Permanent demand excess as business strategy: an analysis of the Brazilian higher-education market |
| title_sort | permanent demand excess as business strategy an analysis of the brazilian higher education market |
| topic | enseñanza superior segmentación de mercado efecto de pares |
| url | http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0080-21072015000100002&lng=en&tlng=en |
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