<p>I actually found the answer in a paper called <a href="http://theunbrokenwindow.com/Higher%20Ed/Introduction/Gordon%20JPE.pdf" rel="noreferrer"> Subsidies, Hierarchy and Peers:The Akward Economics of Higher Education.</a> by Gordon C. Winston.</p>

<p>He goes on at length discussing the objectives of colleges, and concludes we cannot use the same methods by which we predict firm behaviour to predict the behaviour of colleges both public and private.</p>

<p>In his conclusion he writes:</p>

<blockquote>
  <p><i>This paper suggests the standard economic intuition and analogies, built on an understanding of profit-making firms and the economic theory that supports it are likely to be a poor guide to understanding higher education and to making predictions and public policy. <b>One who thinks a college is like any other business will look in all the wrong places</b>...</i></p>
</blockquote>

<p>Don't completely understand of all of his arguments but he addresses my question.</p>

CC BY-SA 3.0
2016-10-14T19:51:18.880Z
+1 It's worth noting that the question is about schools while the answer relates to higher education, ie universities and colleges, although it's very plausible that many of the same considerations apply.
Adam Bailey
CC BY-SA 3.0
2016-10-14T19:10:52.743Z
2016-10-14T19:10:52.743Z
EconJohn
<p>In producer theory, we assume the firm's objective is profit maximisation.</p>

<p>Can we make the same assumption when looking at private schools or does this assumption not apply?</p>

CC BY-SA 3.0
2016-09-08T00:45:24.487Z
Some private schools are charities, either formally or informally
Henry
CC BY-SA 3.0
2016-09-08T02:33:27.067Z
So for-profit colleges like ITT-Tech do have that sort of behavior.
VCG
CC BY-SA 3.0
2016-09-12T16:24:33.213Z
@VCG RIP ITT tech and their high interest loans :P
Kitsune Cavalry
<microeconomics>
Economics of Education: Private School Behaviour
EconJohn
# Economics of Education: Private School Behaviour

(Asked by: username_0 on 2016-09-07)

In producer theory, we assume the firm's objective is profit maximisation.

Can we make the same assumption when looking at private schools or does this assumption not apply?

**Tags:** microeconomics
> **Comments:**
> **username_1**: Some private schools are charities, either formally or informally  
> **username_2**: So for-profit colleges like ITT-Tech do have that sort of behavior.  
> **username_3**: @VCG RIP ITT tech and their high interest loans :P  

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## 1 answers

### Answer by username_0 on 2016-10-14. Score: 5 | Accepted answer

I actually found the answer in a paper called  [Subsidies, Hierarchy and Peers:The Akward Economics of Higher Education.](http://theunbrokenwindow.com/Higher%20Ed/Introduction/Gordon%20JPE.pdf) by Gordon C. Winston.

He goes on at length discussing the objectives of colleges, and concludes we cannot use the same methods by which we predict firm behaviour to predict the behaviour of colleges both public and private.

In his conclusion he writes:

> *This paper suggests the standard economic intuition and analogies, built on an understanding of profit-making firms and the economic theory that supports it are likely to be a poor guide to understanding higher education and to making predictions and public policy. **One who thinks a college is like any other business will look in all the wrong places**...*

Don't completely understand of all of his arguments but he addresses my question.

> **Comments:**
> **username_4**: +1 It's worth noting that the question is about schools while the answer relates to higher education, ie universities and colleges, although it's very plausible that many of the same considerations apply.  

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