Education Consumption in an Emerging Market: Evidence from India

Education has become a prime area of private sector entrepreneurial activity both among small businesses and large corporate chains in India with 40 % market share among school-going children and high potential for growth among 40 % of school age children who do not attend school. This paper uses micro data from rural Indian households to answer questions of interest to both firms investing in private schools and education policy makers. We find that private schools do not merely steal share from public schools but facilitate significant category expansion by increasing the enrollment of students in school. The schools’ choice of marketing mix can have significant impact on school enrollment: even among poor families, student enrollment can increase if schools provide transportation even at the cost of substantially higher fees. Finally, given consumer preferences for private schools, we show that private–public partnerships through government subsidies for private schools can more efficiently increase school enrollment, relative to launching new public schools.