the economics of a blend mandate for biofuels a biofuel blend mandate may increase or decrease consumer fuel prices with endogenous oil prices depending on relative supply elasticities biofuel tax credits always reduce fuel prices tax credits result in lower fuel prices than under a mandate for the same level of biofuel production if tax credits are implemented alongside mandates then tax credits subsidize fuel consumption instead of biofuels this contradicts energy policy goals by increasing oil dependency co 2 emissions and traffic congestion while providing little benefit to either corn or ethanol producers these social costs will be substantial with tax credits costing taxpayers 28 7 billion annually by 2022 copyright 2008 oxford university press

the design of the university system abstract this paper compares the organisation of the university sector under unregulated private provision with the structure which would be chosen by a welfare maximising government it studies a general equilibrium model where students attend university to earn higher incomes in the labour market and universities teach them and carry out research each university chooses its tuition fee to maximise the amount of resources it can devote to research research bestows an externality on society government intervention needs to balance labour market efficiency considerations which would tend to equalise the number of students attending each university with considerations of efficiency on the production side which suggest that the most productive universities should teach more students and carry out more research we find that government concentrates research more that the private market would but less than it would like to do if it had perfect information about the productivity of universities it also allows fewer universities than would operate in a private system

the market for safety regulation and the effect of regulation on fatalities the case of motorcycle helmet laws existing econometric studies of the efficacy of motorcycle helmet laws assume that such laws are exogenously determined and may therefore yield biased results to correct for possible selectivity bias we specify and estimate a self selection model in which the choice of having a helmet law is endogenous our results indicate selectivity bias exists and that if laws were randomly assigned fatality rates for states with helmet laws would on average be less than 1 lower than for states without laws

the analytics of the pricing of higher education and other services in which the customers are inputs many services provide outputs that depend partially on the customers as inputs the presence of other customers often contributes to the output experienced by each purchaser higher education is the premier example others are legion we provide a simple model that addresses the questions of competitive pricing and allocative efficiency for these types of services prices that charge customers for what they get on net output minus input from the firm both are competitive and support efficient allocations these prices internalize the apparent external effects of customers on each other few examples of such prices exist in the real world

do international students crowd out or cross subsidize americans in higher education abstract recent growth in international enrollment at u s universities has raised controversy while critics accuse international students of displacing american students university administrators have argued that they provide much needed tuition revenue this paper examines how international students impact domestic enrollment focusing on a unique boom and bust in international matriculation into u s graduate programs from 1995 to 2005 overall foreign students appear to increase domestic enrollment this positive effect is linked to cross subsidization whereby high net tuition payments from foreign students help subsidize the cost of enrolling additional domestic students

early decision and financial aid competition among need blind colleges and universities abstract this paper presents a stylized theoretical model of competition among need blind colleges and universities that implement early decision admissions under need blind admissions an applicant s financial aid status cannot affect their likelihood of admission in the model a need blind school can use early decision admissions as a screening mechanism to indirectly identify a student s ability to pay while superficially maintaining a need blind policy as a result in equilibrium non financial aid students are more likely to be admitted than financial aid students of comparable quality

stacking low carbon policies on the renewable fuels standard economic and greenhouse gas implications this paper examines the economic and ghg implications of stacking a low carbon fuel standard lcfs with and without a carbon price policy on the renewable fuel standard rfs we compare the performance of various policy combinations for food and fuel prices fuel mix and fuel consumption we also analyze the economic costs and benefits of alternative policy combinations and their distributional effects for consumers and producers in the transportation and agricultural sector in the us using a dynamic multi market partial equilibrium model of the transportation and agricultural sectors we find that combining the rfs with an lcfs policy leads to a reduction in first generation biofuels and an increase in second generation biofuels compared to the rfs alone this policy combination also achieves greater reduction in ghg emissions even after considering offsetting market mediated effects imposition of a carbon price with the rfs and lcfs policy primarily induces fuel conservation and achieves larger ghg emissions reduction compared to the other policy scenarios all these policy combinations lead to higher net economic benefits for the transportation and agricultural sectors relative to the no policy baseline because they improve the terms of trade for us

reducing drunken driving which policies are most effective traffic fatalities are the leading cause of accidental deaths and the leading cause of all deaths for people between the ages of 16 and 25 4 a major cause of traffic accidents is drunken driving reed 12 estimates that the annual number of deaths could be reduced by 12 000 if all drunken driving were eliminated recently increased attention has been directed toward finding ways to reduce the incidence of drunken driving this paper evaluates the relative effectiveness of several policies in terms of reduced fatalities these policies include raising the minimum legal drinking age increasing legal sanctions and enforcement and increasing the price and reducing the availability of alcoholic beverages most studies have focused on a single policy studies by cook 3 mccornac 7 and williams et al 16 examined the effect of raising the minimum legal drinking age their results indicate that auto fatalities have fallen in states where the minimum legal drinking age has been increased ross 13 and votey 15 both examined the drunken driving deterrence policies in scandanavian countries ross was unable to show that they had any effect on behavior using a more sophisticated model votey concluded that the severe deterrence policies reduced the incidence of drunken driving cook and tauchen 2 found that increasing taxes on alcoholic beverages reduced consumption and led to fewer auto fatalities and a lower incidence of cirrhosis death

competition between private and public schools vouchers and peer group effects a theoretical and computational model with tax financed tuition free public schools and competitive tuition financed private schools is developed students differ by ability and income achievement depends on own ability and on peers abilities equilibrium has a strict hierarchy of school qualities and two dimensional student sorting with stratification by ability and income in private schools high ability low income students receive tuition discounts while low ability high income students pay tuition premia tuition vouchers increase the relative size of the private sector and the extent of student sorting and benefit high ability students relative to low ability students

desirability of compatibility in the absence of network externalities i compare the incentives firms have to produce individual components compatible with components of other manufacturers instead of systems composed of components that are incompatible with components of competing manufacturers i show that even in the absence of positive consumption externalities network externalities prices and profits will be higher in the regime of compatibility equilibrium total surplus could be higher in either regime both regimes overprovide variety compared to the surplus maximizing solution in today s environment many products are complex specified by a long array of characteristics part of the decision of the firm is to choose if it should break this long array of features into two or more smaller parts and produce the products corresponding to the smaller arrays instead of the product that embodies the full array we will call the products that correspond to these smaller arrays components and the product that corresponds to the full array a system note that components are by their definition complements components produced by different manufacturers are compatible if it is feasible for the consumers to combine them costlessly into a working system in this paper we will assume that there are two components which make up a system we will discuss competition under full compatibility when components produced by all firms are compatible with each other and under incompatibility when no components produced by different firms are compatible and no hybrid systems can exist 2 assuming availability of the same

competition between private and public schools testing stratification and pricing predictions abstract when there are peer effects in education private schools have an incentive to vary tuition to attract relatively able students epple and romano american economic review 88 1 1998 33 develop a general equilibrium model characterizing equilibrium pricing and student selection into schools when peer effects are present the model predicts that competition will lead private schools to give tuition discounts to more able students and that this will give rise to an equilibrium exhibiting stratification by income and ability between the public and private sectors and to a hierarchy of schools within the private sector the model also yields a variety of comparative static predictions the predictions of the model are tested in this paper using a unique data set assembled by figlio and stone research in labor economics 1999 115 tests of equilibrium predictions of the model reveal that the propensity to attend private school increases with both income and ability and among private schools the propensity to attend the highest tuition schools rises with both income and ability within private schools tuition declines with student ability with a substantial number of even high income households paying little or no tuition the correlation between income and ability is greater in public than private schools tests of comparative static predictions of the model reveal that both income and ability become stronger predictors of private school attendance as public school expenditure falls income becomes increasingly important in determining placement in the private school hierarchy as public school expenditure falls discounts to ability in the lowest quality private school decline as public school expenditure rises while discounts to ability in the highest quality private school are little affected by changes in public school expenditure expenditure in private schools rises as expenditure in public schools increases these empirical results are consistent with the predictions of the theoretical model

a general equilibrium analysis of state and private colleges and access to higher education in the u s abstract we develop a general equilibrium model of the market for undergraduate higher education that captures the coexistence of public and private colleges the large degree of quality differentiation among them and the tuition and admission policies that emerge from their competition for students a quantitative version of the model matches well estimates of enrollment elasticities variation in need based and merit based institutional aid with respectively student income and ability and aggregate characteristics of u s higher education including college attendance in public and private schools tuition levels and the provision of federal aid predictions about the provision of federal aid and the distribution of students across colleges by ability and income match the empirical counterparts well we use the model to examine the consequences of federal and state aid policies a one third increase in the maximum federal aid increases college attendance by 6 of the initial college population most of the increase being in state colleges and mainly of poor students elite private colleges reduce institutional aid and use the net funding gain to spend more on educational inputs and to substitute some highly able poor students for less able rich students reductions in federal or state aid result in substantially reduced attendance mainly by poor students reductions of support to state colleges induce private colleges to increase enrollments modestly and improve in quality as demand shifts toward them

the price of education and inequality abstract constructing a simple model that includes the price of education this paper shows that the educational expenditure of rich households could prevent poor households from escaping poverty the paper offers an explanation for persistent inequality

corporate chartering an exploration in the economics of legal change the corporate form of business organization characterized principally by limited liability share transferability and perpetual life existed far in advance of its official recognition by government in the early nineteenth century and before the unincorporated joint stock company offered through private contracts many of the advantages typically thought to reside exclusively in the corporation 1 despite these deep historical roots however the legal framework surrounding the corporation as we know it today is a relatively recent phenomenon permission to incorporate was long granted sparingly by the state and when granted was accompanied by restrictions on the amount of authorized capital on the scope of operations and on the length of the corporate franchise permission to incorporate for any lawful purpose was not common until 1875 2 thus while corporateness flourished early regulation delayed the beginning of the chartered corporation s rise to prominence until not much more than a century ago

linking soy oil demand from the us renewable fuel standard to palm oil expansion through an analysis on vegetable oil price elasticities abstract the united states us renewable fuel standard and california s low carbon fuel standard support the use of soy biodiesel and renewable diesel in the transport fuel supply for climate mitigation however linkages between the markets for soy oil and palm oil which is associated with very high land use change emissions could negatively affect the climate performance of soy based biofuels this study estimates the own and cross price elasticities for the supply of soy and palm oils in the us using country level data from 1992 to 2016 under rational expectations through a seemingly unrelated regressions system of equations we find a positive cross price elasticity of palm oil import with respect to soy oil price and a positive reaction of supply of soy oil to increase in prices of palm oil these results suggest that us biofuel policies may underestimate substitution between soy and palm oils and thus overestimate the climate benefits from soy based biofuel

policy watch antitrust goes to college it may have come as a shock to many economists especially those in academia to learn that the antitrust division of the u s department of justice doj has been investigating alleged price fixing and information exchange of financial aid among 23 prestigious east coast colleges and universities these schools include the ivy overlap group mit brown columbia cornell dartmouth harvard university of pennsylvania princeton and yale and the pentagonal sisters group amherst barnard bowdoin bryn mawr colby mount holyoke middlebury smith trinity tufts vassar wesleyan and williams we have no specific knowledge concerning the possible validity of these allegations or expertise about their legality rather in this article we wish to present the potential applicability of current antitrust doctrines to colleges and their conduct and the possible defenses that they might raise to justify their actions

market structure in the production of economics ph d s a century ago economics began to develop as a separate and significant part of the curriculum in american colleges and universities along with increased popularity and enrollment came the need for faculty specifically trained in economics a number of american scholars turned to europe germany in particular for their training and brought the german ph d back as a model for graduate education the first economics ph d s earned in this country were awarded by harvard 1875 yale 1877 and johns hopkins 1878 1 these first ph d s were two year degrees by 1900 economists had generally upgraded the ph d to three years beyond the baccalaureate degree consisting of two years of course work and another year for the dissertation graduate classes were taught in seminar format with considerable interaction between professors and students as the production process matured dissertations became longer more sophisticated and more specialized i e they were no longer the mark of a cultured gentleman but the demonstration of a professional skill 15 11 the newly formed american economic association began to keep track of doctoral candidates in economics in 1904 6 in 1904 there were 8 institutions which reported having men working on ph d s and by 1928 that number had increased to 27 2 while the american economic association did not tabulate the output of completed ph d s the national research council has compiled a database containing the number of ph d s by institution by year since 1920 their survey of earned doctorates indicates that 22 ph d s were awarded in economics by 6 different universities in 1920 by 1992 that number had grown to 910 ph d s from 123 different institutions

optimal incentives for income generation in universities the rule of thumb for the compton tax abstract in this paper we propose a novel framework to model one of the key links between universities and industry the undertaking of applied research we postulate that a basic objective of universities is to undertake fundamental research and that they receive public funding to do so nevertheless faced with tight budget constraints universities may have incentives to allow their staff to devote some of their time to income generating activities such as applied research or consultancy this opens up two channels by which universities can ease their budget constraint i by allowing academics to supplement their income universities may be able to hold down academic salaries ii universities can effectively tax the income that academics raise through applied research or consultancy for example through the imposition of overhead charges by easing their budget constraint universities may be able to take on sufficient extra staff to more than offset the time that existing staff are spending on non fundamental research and thus increase the amount of fundamental research that they can achieve with a given public budget we develop a model of this link between universities and firms and use it to determine the optimal tax that universities should impose on applied research income the compton tax used at mit in the 1930s is an early example of the use of this instrument

reputation and school competition abstract stratification is a distinctive feature of competitive education markets that can be explained by a preference for good peers learning externalities can lead students to care about the ability of their peers resulting in across school sorting by ability this paper shows that a preference for good peers and therefore stratification can also emerge endogenously from reputational concerns that arise when graduates use their college of origin to signal their ability reputational concerns can also explain puzzling observed trends including the increase in student investment into admissions exam preparation and the decline in study time at college jel i21 i23 i26 j24

what s happened to the price of college quality adjusted net price indexes for four year colleges in this paper we estimate hedonic models of the consumer price of college to construct quality adjusted net price indexes for u s four year colleges where the net price of college is defined as tuition and fees minus financial aid for academic years 1990 91 to 1994 95 we find adjusting for financial aid leads to a 22 percent decline in the estimated price index for all fouryear colleges while quality adjusting the results leads to a further albeit smaller decline nevertheless public comprehensive colleges perhaps an important gateway to college for students from low income backgrounds experienced the largest net price increases

subsidies hierarchy and peers the awkward economics of higher education higher education is a business it produces and sells educational services to customers for a price and it buys inputs with which to make that product production is subject to technological constraints costs and revenues discipline decisions and determine the long run viability of a college or university but higher education is not just a business while that statement is often meant to imply that higher education is nobler than business more decent and humane in the purposes it serves it can also mean that even in economic terms higher education is in important ways simply different from a business this paper asks how well our extensive experience with commercial businesses and the microeconomic theory of firms and markets that has evolved to describe them helps in understanding the economics of higher education that experience and those insights will be used by trustees politicians administrators lawyers reporters and the public as well as by economists to understand and evaluate the behavior of colleges and universities so it is useful to ask how safe it is to use the economic analogy in the context of higher education drawing parallels between universities and firms students and customers faculty and labor markets and so on the discussion here seeks to identify the key economic features of higher education that make it different from familiar for profit industries and to ask what difference those differences make this is a stick that can be picked up from either end one approach is to start with meticulous economic theory and see how far it can be made to encompass the economic realities of higher education an excellent recent paper by rothschild and white 1995 does that in their matching model students and colleges meet

are efficiency and equity in school finance substitutes or complements this paper analyzes cases made for local and centralized school finance and policies such as vouchers categorical aid and equalization aid an ideal system of school finance would achieve efficiency and equity by ensuring every person invests in the amount of schooling that is socially optimal for him the author evaluates the empirical evidence for and the merit and importance of arguments for each policy she concludes that the theoretical arguments for centralized finance not only exaggerate the efficiency equity tradeoff but actually make better arguments for a system combining local school finance with categorical aid and means tested vouchers

efficient tuition fees and examinations we assume that students observe only a private noisy signal of their ability and that universities can condition admission decisions on the results of noisy tests if the university observes a private signal of each student s ability which is soft information then asymmetries of information are two sided and the optimal admission policy involves a mix of pricing and pre entry selection based on the university s private information in contrast if all test results are public knowledge then there is no sorting on the basis of test scores tuition alone does the job of implementing an optimal degree of student self selection these results do not depend on the existence of peer effects the optimal tuition follows a classic marginal social cost pricing rule jel d82 h42 i22 j24

market power and price discrimination in the u s market for higher education the main purpose of this paper is to estimate an equilibrium model of private and public school competition that can generate realistic pricing patterns for private universities in the u s we show that the parameters of the model are identified and can be estimated using a semi parametric estimator given data from the npsas we find substantial price discrimination within colleges we estimate that a 10 000 increase in family income increases tuition at private schools by on average 210 to 510 a one standard deviation increase in ability decreases tuition by approximately 920 to 1 960 depending on the selectivity of the college discounts for minority students range between 110 and 5 750

could do better the effectiveness of incentives and competition in schools this paper studies the eects of incentive mechanisms and of the competitive environment on the interaction between schools and stu dents in a set up where their eort aects the students educational attainment we show that increasing the power of the incentive scheme and the eectiveness of competition may have the counterintuitive ef fect of lowering the students attainment in a simple dynamic set up where the reputation of the schools aects recruitment we show that increased competition leads to segregation of pupils by ability

multi dimensional skills specialization and oligopolistic competition in higher education abstract this paper develops a differentiated products model of school competition that distinguishes among different dimensions that matter in the skill acquisition process the model predicts that when identical schools compete for students specialization may arise as a competition strategy this serves rich students education goals well poorer students however may attend schools with specializations that do not cater to their relative strengths by doing so these poorer students complement the weaknesses of the richer students through peer effects and receive financial aid in return the empirical analysis provides strong support for the model s predictions about within school implications of specialization

first degree price discrimination goes to school personalized pricing is widely discussed but seldom observed making studies of its efficacy rare yet first degree price discrimination is common in the pricing of higher education and i use data on prices and the characteristics of students admitted to a professional graduate program at a public university to estimate a matriculation demand function i then derive linear pricing functions that maximize revenue for a target number of students by allowing these functions to depend on progressively richer sets of observables i explore the effect of personalization of pricing on profit tailoring prices to a one dimensional measure of student quality would raise revenue by 2 2 per cent above the revenue with uniform pricing pricing based on both student quality and state residency raises revenue by 8 4 per cent and further tailoring based on available observables raises prices 9 0 per cent above the maximum revenue under uniform pricing pricing that obeys current statutory tuition limits raises revenue less but still by just over half as much i also infer the welfare weights that the pricing process implicitly attaches to student characteristics

the determinants of donative revenue flows from alumni of higher education an empirical inquiry institutions of higher education are increasingly relying upon alumni giving and endowment earnings as sources of funding this paper utilizes a new database on average alumni donations at the institutional level and institutional characteristics to explore the role that lagged institutional characteristics and policy have on subsequent donations to the institution our results confirm the noncontemporaneous effects of variations in the average scholastic achievement of matriculated students a proxy for both student quality and student socioeconomic status on subsequent donative revenue flows and indirectly address some of the open questions left by previous theoretical inquiries

networks and compatibility implications for antitrust in this paper we draw crucial parallels between the concepts of compatibility and networks and the more traditional concepts of complementarity and vertical relationships we also develop the important distinctions between two way networks and one way networks we then apply our framework to a number of current antitrust issues

renewable energy policies and competition for biomass implications for land use food prices and processing industry abstract we use a mathematical programming model to examine the impacts of simultaneous implementation of two us biofuel and bioenergy policies on commodity markets and spatial distribution of future cellulosic biorefineries the key findings based on our numerical simulation are 1 the number and average annual production capacity of cellulosic biofuel refineries depend on the total renewable fuels mandate 2 the mix of cellulosic biomass feedstock depends on the assumptions about the production costs of energy crops and the amount of cropland that can be used for energy crops but regardless of the assumptions crop residues are the primary biomass source to meet the demand for biomass for biofuel production and electricity generation and 3 the biomass production areas would surround either future cellulosic biorefineries or the existing coal based power plants to reduce the costs of biomass transportation these findings have important implications for biorefinery investors and provide valuable policy insights for the selection of biomass crop assistance program project areas

in state versus out of state students the divergence of interest between public universities and state governments abstract this paper examines the divergence of interest between universities and state governments concerning standards for admitting in state versus out of state students we find that public universities set lower minimum admission standards for in state than out of state applicants presumably in response to state pressure while private universities treat both groups equally however we also find that favoring in state applicants goes against states long term financial interest this is because marginal out of state students pay higher tuition than marginal in state students pay more in future state taxes and are equally influenced in whether they locate in the state after graduation by attending public university there

regulation in the market for education and optimal choice of curriculum we analyze educational institutions incentives to set up demanding or lax curricula in duopolistic markets for education with endogenous enrolment of students we assume that there is a positive externality of student achievement on the local economy comparing the case of regulated tuition fees with an unregulated market we identify the following ine ciencies under regulated tuition fees schools will set up ine ciently lax curricula in an attempt to please low quality students even if schools internalize some of the externality on the other hand unregulated schools set up excessively di erentiated curricula in order to relax competition in tuition fees deregulation gets more attractive if a larger fraction of the externality is internalized

the economics of private liberal arts colleges private not for profit liberal arts colleges operate in a knotty market where consumers are both inputs and outputs and the total product is not directly observed our model explains interactions among price quantity reputation and cost the evidence suggests that these institutions alter tuition and financial aid to set price below the market clearing value reputation is more a function of expenditure per student and student quality than tradition and endowment costs depend more on student inputs and the price of faculty than that of capital scale economies occur at less selective colleges with excess capacity and a hierarchy exists among purveyors

modeling agricultural supply response using mathematical programming and crop mixes mathematical programming models are widely used in agricultural sector analysis however the lack of micro level data as well as computational requirements necessitate the aggregation of individual producers into representative units when working at the sectoral level this usually leads to unrealistic extreme specialization in supply responses in 1982 mccarl introduced the historical crop mixes approach to avoid extreme specialization we extend this approach by generating additional synthetic crop mixes using supply response elasticities and systematically varied commodity prices in addition to avoiding extreme specialization this approach provides flexibility when future supply responses can be vastly different from past responses an application to u s biofuel policy analysis is presented

alternative transportation fuel standards welfare effects and climate benefits this paper develops an integrated model of the fuel and agricultural sectors to analyze the welfare and greenhouse gas emission ghg effects of the existing renewable fuel standard rfs a low carbon fuel standard lcfs and a carbon price policy the conceptual framework shows that these policies differ in the incentives they create for the consumption and mix of different types of biofuels and in their effects on food and fuel prices and ghg emissions we also simulate the welfare and ghg effects of these three policies which are normalized to achieve the same level of us ghg emissions by promoting greater production of food crop based biofuels the rfs is found to lead to a larger reduction in fossil fuel use but also a larger increase in food prices and a smaller reduction in global ghg emissions compared to the lcfs and carbon tax all three policies increase us social welfare compared to a no biofuel baseline scenario due to improved terms of trade even when environmental benefits are excluded global social welfare increases with a carbon tax but decreases with the rfs and lcfs due to the efficiency costs imposed by these policies even after including the benefits of mitigating ghg emissions

admission tuition and financial aid policies in the market for higher education we present an equilibrium model of the market for higher education our model simultaneously predicts student selection into institutions of higher education financial aid educational expenditures and educational outcomes we show that the model gives rise to a strict hierarchy of colleges that differ by the educational quality provided to the students we also develop a new estimation procedure that exploits the observed variation in prices within colleges identification is based on variation in endowments and technology it does not rely on observed variation in potentially endogenous characteristics of colleges such as peer quality measures and expenditures we estimate the structural parameters using data collected by the national center for education statistics and aggregate data from peterson s and the national science foundation