Assessing Higher Education Policy in Brazil: A Mixed Oligopoly Approach

Higher education is increasingly provided by both public and private universities, in particular in the developing world. Considering a mixed oligopoly setting and inspired by the Brazilian context, we explore the relative merits of some frequently used higher education policies in a context where a high-quality public university interacts with a lower-quality private university. We calibrate the model to match relevant values of Brazilian earnings and educational distribution. Subsidising private university tuition fees increases participation, but many high ability students remain excluded, especially if the subsidy is substantial. Affirmative action improves the surplus associated with the public university system, as more high ability individuals attend the public university, but virtually does not increase higher education participation. Although an expansion of public university places induces a reduction in private university fees, total university enrolment grows slowly, and many high-ability individuals cannot obtain a university education.