Mixed oligopoly in education

This paper studies oligopolistic competition in education markets when schools can be private and public and when the quality of education depends on ìpeer groupî e§ects. In the Örst stage of our game schools set their quality and in the second stage they Öx their tuition fees. We examine how the (subgame perfect Nash) equilibrium allocation (qualities, tuition fees and welfare) is a§ected by the presence of public schools and by their relative position in the quality range. When there are no peer group e§ects, e¢ ciency is achieved when (at least) all but one school are public. In particular in the two school case, the impact of a public school is spectacular as we go from a setting of extreme di§erentiation to an e¢ cient allocation. However, in the three school case, a single public school will lower welfare compared to the private equilibrium. We then introduce a peer group e§ect which, for any given school is determined by its student with the highest ability. These PGE do have a signiÖcant impact on the results. The mixed equilibrium is now never e¢ cient. However, welfare continues to be improved if all but one school are public. Overall, the presence of PGE reduces the e§ectiveness of public schools as regulatory tool in an otherwise private education sector.

Testing for Stock Market Integration in a Developing Economy: Colombia

This paper examines the linkage between two parallel stock exchanges trading the same shares in Colombia, namely the Bogotá Stock Exchange and the Medellín Stock Exchange. We provide empirical evidence to support the hypothesis that these two markets can be best described as fully integrated over a period of almost four decades, which is consistent with the view that arbitrage opportunities are only possible in the short but not in the long run. In addition, we find evide