Strategic government subsidization for higher education in two-sector model

概要

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This paper examines strategic games of government and higher education. When we study strategic games of government and higher education, this game is then embedded in a two-stage game. The government chooses a subsidy to maximize social welfare and the two institutions choose the qualities simultaneously. The main results of the paper are to characterize the subgame-perfect equilibria of the government-higher education game, and to show that the governmental intervention may improve the social welfare by reducing the distortions due to externality and imperfect competition.