University competition: symmetric or asymmetric quality choices
Faculty of Applied Economics
Antwerp :UA, 2005
Working paper / University of Antwerp ; 2005:21
University of Antwerp
In this paper we model competition between two publicly …nanced and identical universities deciding on quality and on admission standards. The education o¤ered by the two universities is di¤erentiated horizontally and vertically. If horizontal di¤erentiation dominates, the Nash equilibrium is symmetric, and the two universities o¤er the same quality levels. If vertical di¤erentiation dominates, the Nash equilibrium is asymmetric, and the high quality university attracts the better students. Symmetric and asymmetric equilibria may also coexist. We highlight the importance of three driving forces behind these results: a single crossing condition, the peer group e¤ect, and the students’mobility costs. We also compare the monopoly and the duopoly case. The model we use is an extension of Del Rey’s  model.