The industrial organization of public higher education in Brazil: market structure, behavior, and efficiency

Abstract

Higher education is extremely important for economic and social development. However, the higher education product has intrinsic traits that require State intervention in the sector, which hinders the analysis of the industry via traditional methods of the Economics discipline. This study aimed to carry out an analysis of competition in the Brazilian higher education sector, focusing on high quality institutions and using the modus operandi of antitrust authorities around the world as a baseline. Specifically, analytical techniques from the field of Industrial Organization have been employed, in addition to the application of non-parametric method of data envelopment analysis to gauge efficiency in the industry. Results showed that public higher education institutions (HEIs) face competitive pressure from high-quality private HEIs. Additionally, relevant markets present a wider scope, with either regional or national range, depending on schools’ quality. In general, markets are not concentrated and do not raise anticompetitive concerns. Independent admissions exams, product differentiation, and price discrimination were identified as the main conducts carried out by schools. Finally, data envelopment analysis shows that average efficiency in the sector is high, scale economies are highly relevant, and public institutions are in average more efficient than their private counterparts.