Mencion de Calidad: Reducing Inefficiency in Higher Education Markets when There Are Networks Externalities

摘要

This paper studies the decentralized choice of universities facing the decision to launch a new program at the graduate level (a master or a doctoral program) when students' enrollment decisions are affected by network effects. Possible inefficiencies associated to the existence of network externalities on student utility are first identified. University competition can eliminate some, although not all, of these inefficiencies. Under these circumstances, a hallmark certifying the high quality of a program (known in Spain as Mencion de Calidad) o may prove useful to select the most efficient equilibrium.