To what extent does the Econ 101 story hold when many existing suppliers are nonprofits?
My very unscientific chat with heads of Florida private schools over past year has been:
1. Some private schools "fill up" any open seats they have, with ESA-aided demand.
2. They haven't raised prices much, though, and don't plan to. The incentives of Head Of School and trustees don't lean in that direction. They're not investors or shareholders. No obvious profit sharing upside. In fact, some trustees are likely current customers. They personally "lose" when tuition rises.
3. So far, not many new FL private schools have opened - I'm guessing because we're early in the universal ESA history. But maybe I'm wrong here, would love to hear that. I assume they'll start coming in, maybe even a chain or two.
Great points. Agreed that Econ 101 assumes profit maximization, and private schools are mostly nonprofit. While they’re not driven by profit, the higher price level at P2 enables them to cover their costs and pursue their non-pecuniary goals—like serving more students while covering costs.
It seems frequently school Head and Trustees DO want to "top off." So a 5% tuition increase instead of 4% Cover that last $20k, $30k shortfall. A little for the rainy day fund. A one-time capital improvement.
But serving more students? Less so. It would be interesting to research why. Some tell me they like a longer wait list: gives them a "Better Prestige." Some say they already struggle a bit on teacher quality, so more "open slots" is unappealing.
To what extent does the Econ 101 story hold when many existing suppliers are nonprofits?
My very unscientific chat with heads of Florida private schools over past year has been:
1. Some private schools "fill up" any open seats they have, with ESA-aided demand.
2. They haven't raised prices much, though, and don't plan to. The incentives of Head Of School and trustees don't lean in that direction. They're not investors or shareholders. No obvious profit sharing upside. In fact, some trustees are likely current customers. They personally "lose" when tuition rises.
3. So far, not many new FL private schools have opened - I'm guessing because we're early in the universal ESA history. But maybe I'm wrong here, would love to hear that. I assume they'll start coming in, maybe even a chain or two.
Great points. Agreed that Econ 101 assumes profit maximization, and private schools are mostly nonprofit. While they’re not driven by profit, the higher price level at P2 enables them to cover their costs and pursue their non-pecuniary goals—like serving more students while covering costs.
Agree.
It seems frequently school Head and Trustees DO want to "top off." So a 5% tuition increase instead of 4% Cover that last $20k, $30k shortfall. A little for the rainy day fund. A one-time capital improvement.
But serving more students? Less so. It would be interesting to research why. Some tell me they like a longer wait list: gives them a "Better Prestige." Some say they already struggle a bit on teacher quality, so more "open slots" is unappealing.