Permanent demand excess as business strategy: an analysis of the Brazilian higher-education market

Many Higher Education Institutions (HEIs) establish tuition below the equilibrium price to generate permanent demand excess. This paper first adapts Becker’s (1991) theory to understand why the HEIs price in this way. The fact that students are both consumers and inputs on the education production process gives rise to a market equilibrium where some firms have excess demand and charge high prices, and others charge low prices and have empty seats.Second, the paper analyzes this equilibrium empirically. We estimated the demand for undergraduate courses in Business Administration in the State of São Paulo. The results show that tuition, quality of incoming students and percentage of lecturers holding doctorates degrees are the determining factors of students’ choice. Since the student quality determines the demand for a HEI, it is calculated what the value is for a HEI to get better students; that is the total revenue that each HEI gives up to guarantee excess demand. Regarding the “investment” in selectivity, 39 HEIs in São Paulo give up a combined R$ 5 million (or US$ 3.14 million) in revenue per year per freshman class, which means 7.6% of the revenue coming from a freshman class.

Effect of investments on fundamentals and market reaction on pre-operational and operational Brazilian companies for the period 2006-2012

ABSTRACT This paper provides evidence on the market reaction to corporate investment decisions whose shareholder value is largely attributed to growth options. The exploratory research raised pre-operational companies and their operational pairs on the same economy segments. It had the purpose of investigating the existence of statistical differentiation from financial indicators that reflect the installed assets and growth assets, and then study the market reaction to changes in fixed assets as a signaling element about investment decisions. The formation process of operational assets and shareholder value almost exclusively dependent on asset growth stands out in the pre-operational companies. As a result, differentiation tests confirmed that the pre-operational companies had their value especially derived on growth options. The market reaction was particularly bigger in pre-operational companies with abnormal negative stock returns, while the operational companies had positive returns, which may indicate that the quality of the investment is judged based on the financial disclosure. Additionally, operational companies' investors await the disclosure to adjust their prices. We conclude that the results are consistent with the empirical evidence and the participants in financial markets to long-term capital formation investments should give that special attention.

Comparison of early cortical networks in efficient and inefficient visual search: an event-related potential study.

Functional magnetic resonance imaging studies have indicated that efficient feature search (FS) and inefficient conjunction search (CS) activate partially distinct frontoparietal cortical networks. However, it remains a matter of debate whether the differences in these networks reflect differences in the early processing during FS and CS. In addition, the relationship between the differences in the networks and spatial shifts of attention also remains unknown. We examined these issues by applying a spatio-temporal analysis method to high-resolution visual event-related potentials (ERPs) and investigated how spatio-temporal activation patterns differ for FS and CS tasks. Within the first 450 msec after stimulus onset, scalp potential distributions (ERP maps) revealed 7 different electric field configurations for each search task. Configuration changes occurred simultaneously in the two tasks, suggesting that contributing processes were not significantly delayed in one task compared to the other. Despite this high spatial and temporal correlation, two ERP maps (120-190 and 250-300 msec) differed between the FS and CS. Lateralized distributions were observed only in the ERP map at 250-300 msec for the FS. This distribution corresponds to that previously described as the N2pc component (a negativity in the time range of the N2 complex over posterior electrodes of the hemisphere contralateral to the target hemifield), which has been associated with the focusing of attention onto potential target items in the search display. Thus, our results indicate that the cortical networks involved in feature and conjunction searching partially differ as early as 120 msec after stimulus onset and that the differences between the networks employed during the early stages of FS and CS are not necessarily caused by spatial attention shifts.