Competitive equilibrium and informational asymmetry in the private higher education market

We develop two formal competitive models of the private higher education market focusing on quality and tuition where informational asymmetry is present: one consisting of for-profit universities only, and the other including also private non-profit universities. For both models, we characterize the competitive equilibrium to gain insights into the structure of this market. We also establish necessary and sufficient conditions for the equilibrium to exist. The results demonstrate the spillover impact of non-profit universities on the overall market quality through reducing the information gap. The findings offer policy implications to improve the overall quality of this market.