CALIFORNIA STATE UNIVERSITY, HAYWARD

COLLEGE OF BUSINESS AND ECONOMICS

MANAGERIAL ECONOMICS

GUIDELINES FOR CASE ANALYSIS

Graduate Student Fee Differentials in California Public Higher Education

I. MAIN ISSUES

1. Cost Based Pricing and Allocative Efficiency:

(i) Is education a public good (define) and does it provide significant poitive externalities (define)?

(ii) Does the provision of education have significant redistributional effects as compared to other private goods?

(iii) What is the extent of the subsidy in California public higher education (see Ex. 7 & 9) and is the consequent risk of misallocation of resources great as a result?

2. Private versus External Benefits of Higher Education:

(i) Does public higher education have substantial private benefits that can be measured (see Ex. 1-6)

(ii) What are the externalities that can be said to result from higher education?

3. Equity and Redistributional Benefits:

(i) What are the typical equity/redistributional grounds on which higher education subsidies can be justified?

(ii) What are the actual redistributional effects of subsidized public higher education (see Ex. 11 and 12)?

(iii) What are the unintended consequences of the subsidization of California public higher education?

Please use the data in the case to support your arguments on these issues and look at the questions at the end of the case.