TY  - JOUR
AU  - Hoxby,Caroline M.
TI  - Benevolent Colluders?  The Effects of Antitrust Action on College Financial Aid and Tuition
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7754
PY  - 2000
Y2  - June 2000
UR  - http://www.nber.org/papers/w7754
L1  - http://www.nber.org/papers/w7754.pdf
N1  - Author contact info:
Caroline M. Hoxby
Department of Economics
Stanford University
Landau Building, 579 Serra Mall
Stanford, CA 94305
Tel: 650-725-8719
Fax: 650-725-5702
E-Mail: choxby@stanford.edu
M2  - featured in NBER digest on 2000-11-01
AB  - The Department of Justice's (DOJ's) investigation of private colleges for price-fixing caused the  Overlap' group of colleges to discontinue their meetings. DOJ alleged that the meetings enabled the colleges to collude on higher tuition and increase their tuition revenue. The colleges claimed that they needed the meeting to implement their policies of basing aid on need and fully covering need. This paper investigates whether the cessation of the meeting caused a break-down of need-based aid policies or whether, as DOJ argued, the meeting was unnecessary for such policies. I also attempt to determine whether the cessation of the meeting affected tuition or tuition revenue. Finally, I examine the question of whether need-based aid is simply redistribution or a method of internalizing externalities among students. Many students would like colleges to maintain policies of need-based aid for others while making exceptions for them, awarding them grants for which they would not qualify based on need. Yet, the same students might prefer a regime of need-based aid, knowing that it would apply them, because basing aid on need affects colleges' selectivity and diversity.
ER  -