Does competition improve public school efficiency? A spatial analysis

Advocates for educational reform frequently call for policies to increase competition between schools because it is argued that market forces naturally lead to greater efficiencies, including improved student learning, when schools face competition. Researchers examining this issue are confronted with difficulties in defining reasonable measures of competition within local educational markets. We approach the problem through the application of Geographical Information System (GIS) tools to the development of a school competition index (SCI) for the state of Mississippi. The SCI captures the degree of competition each public school in the state faces from peer private schools spatially located within their local market area. We find that higher degrees of competition from private schools significantly increase public primary and high school efficiency, as measured by the proficiency rates on high-stakes examinations. It is anticipated that the current results will inform policymakers regarding the viability of competition-based reforms.

► Microeconomic theory implies that competition increases market efficiency.
► Used GIS to measure the degree of competition between public and private schools.
► Major market competition components: number, size and the geographical distance.
► Public school's efficiency increases with higher competition from private schools.