Price elasticity of demand on the economic education in Kursk region

Klikunov N.D.Kursk Institute of Management, Economics and Business

Concept:

Higher education is a composite commodity, that deliver by market and nonmarket canals. In higher education design it is important to measure demand and only after that construct the supply scheme. Price elasticity of demand is one of the key elements in this process.

Methods:

• SCP-paradigm (structure-conduct-perfomance),

• Econometric analysis?• Switching analysis

Logics and results of investigation:

• Definition of the Herfindal index in the market of the economic education. I took the data of total economic students in Kursk region and defined the share of every college (the revenue rate could not be correctly defined, there are many forms allowances) In the result the HI=0.2768

Logics and results of investigation:

• Definition of the Lerner index . I had the prices, but have no idea about MCi. MC was defined as sum of salary cost plus rent cost per group of students (10 students) per semester. The average MC was 82’700 rubles ($2750). The average price (Pi) per group counted as P*10*0.85. (it was proposal about average 15% allowance, P – price of education for one student per semester). I got different meaning of price per group and equal MC (it was also a simplification). In the result the LI=0.46

Logics and results of investigation:

• Definition of the price elasticity of market demand. Market elasticity was minus 0.6. After that the price elasticity was defined for every college in Kursk region. In my college Kursk Institute of Management, Economics and Business it was 8.57

Logics and results of investigation:

• To verify results I took a simple econometric analysis. I had the data about the prices and quantities of freshmen in my college for ten years. I took into account the differences in number of school graduates and dynamics of real income in Kursk region (for simplicity income elasticity was equal 1) and got regression. I got the meaning of the price elasticity for my college as 4.2.

Problems:

• Discrepancy• How to use the switching analysis

Complications:

• Higher education is market and administrative sphere

• Problem of the endogenous and exogenous factors division

• Problems with data set• Problem with the discrepancy explanation

Further investigations:

• I’d like to do more rigid econometric analysis of data set and include of colleges in region, that deliver economic and management education

• I’d like to analyze the budget constrain and preferences of typical householders. After that I’ll try to get the elasticity parameter from utility function of typical householder. This problem will be easy for Cobb-Douglass type function, but for CES-function it will be not so simple. To define it I plan to use sociological methods

• I’d like to compare the results of implication this three method and find the statistical or methodological errors

• I’d like to define the propensity to collusion parameter for different Russian regions by using the basic IO equation

References:

• Nicholson Walter. Microeconomic theory. Basic principles and extensions. – Thomson, Inc. 2005.

• Cabral Luis M.B. Introduction to industrial organization. – 2000, Massachusetts Institute of Technology. 354 p.

• Victor R. Fuchs. Income elasticity of demand // www.nber.org/chapters/c1694 - 22k - 1970-04-06

• Infant and Child Death // www.nber.org/reporter/winter05/joyce.html - 38k - 2009-10-22

• New economics of smoking // www.nber.org/reporter/summer03/gruber.html - 40k - 2009-10-23

Links:

• www.mebik.ru• My blog: www.openkursk.ru• E-mail: nauka@znanie.kurskcity.ru

• Thanks…