Academic journal article Kuram ve Uygulamada Egitim Bilimleri

Regulation of Education Market Access Based on Mixed Oligopoly Model*

Academic journal article Kuram ve Uygulamada Egitim Bilimleri

Regulation of Education Market Access Based on Mixed Oligopoly Model*

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Education, traditionally viewed as a public product, has always attracted numerous financial supports from the government. With the rapid growth in population and education demand, the government can no longer support the huge education expenditures. As a result, there was a huge decline in the amount of education products and efficiency. Starting with "The Lighthouse in Economics" by Ronald H. Coase, scholars around the world have been exploring the possibility of private supply of traditional public goods, laying a theoretical basis for private education products. Currently, the education market worldwide is open to private capital to varying degrees. Private schools have become an integral part of the education system, providing education opportunities for many children (Baird, 2009; Dixon, 2012; Tooley, 2009; Tooley & Dixon, 2006). The entire education market is featured by the mixture of state-owned capital and private capital.

Private capital is an effective means to solve the government failure in education. After entering the education market, private capital can make up for the lack of government funds and improve education efficiency through its flexible operating mechanism. However, private capital is profit-seeking in nature. To maximize the profit, the marginal cost is often set as equal to the marginal benefit during pricing. This goes against the universality and equity of education, especially elementary education. Hence, an education product with strong externalities should not be handed over to private capital for excessive marketization. If it must be marketized, the issue of equity ought to be considered to meet the education demand of the poor. For instance, it should be checked whether private schools could satisfy the education needs of the poor (Ashley, Mcloughlin & Aslam, 2014; Härmä, 2011; Nguyen & Raju, 2014; Tooley & Dixon, 2006; Heyneman & Stern, 2014). Compared to private schools, public schools ensure the education equity through the pursuit of the maximal social welfare, despite the lack of efficiency.

The existing studies on education mainly concentrate on two questions: whether education products should be marketized, and how should the government regulate the education market. Complete opposite answers have been put forward to these questions. In light of the high efficiency of private schools, some scholars consider marketization as an effective solution to the limited amount, poor quality and irrational allocation of public education resources (Phillipson, Shukla & Joshi, 2008; Tooley, 2009). In contrast, some scholars treat private schools as a supplement to the education products supplied by the government and attempt to impose limits on the marketization of education. They worry that market-oriented education policies may sacrifice educational equity (Robertson and Dale, 2013; Menashy, 2014; Verger, Bonal & Zancajo, 2016), and even call for a ban on for-profit education (Chumacero and Paredes, 2008; Ginsburg, Brady and Draxler, 2012; Hill & Welsch, 2009). Chile, India and other countries maintain education equity by providing education vouchers or forcing private schools to offer education to low-income people. Moreover, many hold that strict legal regulation should be adopted to restrict the development of private schools and to keep the state as the provider of free education (Fielden & LaRocque, 2009; Härmä & Adefisayo, 2013; McLoughlin, 2013; Singh, 2015). of course, the governments of some developing countries are too incompetent and inefficient in regulation to solve the externalities of private schools (Baum, Cooper, R., & Lusk-Stove, 2018). To sum up, there must be a limit on the market supply of education products, such that the provision could be completed smoothly through the coordination between government and the market. This limit is the problem to be discussed in this paper. …

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