Permanent demand excess as business strategy: an analysis of the Brazilian higher-education market

Revista de Administração (São Paulo)

Rodrigo Menon Simões Moita¹  Carlos Eduardo Lobo E Silva¹  Eduardo De Carvalho Andrade¹ 

关键词: higher education;    market segmentation;    excess demand;    educação superior;    segmentação de mercado;    efeito dos pares;    enseñanza superior;    segmentación de mercado;    efecto de pares;   

DOI  :  10.5700/rausp1181

来源: SciELO

【 摘 要 】

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.

【 授权许可】

CC BY   
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