Oct 14 2011
The mystery of increasing tuition fees – is it supplier power?
Applying is easy - a student doesn't have too many other choices. REFERENCED: "Advertisement." Photograph. Think UBC. Vancouver: University of British Columbia, Web. 24 Oct 2011..
Guess what? That $4,916/year2 you pay in commerce general tuition fees is going to keep increasing. But this despair is spreading everywhere – the average undergraduate tuition fees increased from $5,366 to $5,1461 in 2011. It seems universities can easily drive up prices for one reason: they have supplier power.
With limited amounts of universities, consumers face limited choices and are forced to accept increasing prices. UBC has its fun, SFU has its depressing buildings – each university is unique and “differentiated.” Students or “buyers of education” cannot obtain the same education, atmosphere, and facilities from each university – students merely accept increased tuition as they have no other choice to obtain another such good. Me, you and that annoying classmate sitting behind you – we’re individually not a large proportion of a university’s “sales.” So the bargaining power of universities is high – a single student can’t negotiate a lower fee as, individually, they are a low proportion of a university’s revenue. But wait, why don’t we just leave school?
The substitutes for university education – for example working – are becoming less appealing as wage differentials increase. What does this mean? Students have nothing else to “buy” that has the same value for their time and money. What gives universities the most supplier power? The “buyer” (us students) must buy inputs (education) to create our output (a successful future) – so I guess we’re all screwed!
1 = http://www.myuniversitymoney.com/rising-tuition-fees-the-next-bubble.html/
2= http://www.students.ubc.ca/coursesreg/tuition-fees-deposits/tuition-fees/
This is a very interesting blog post Kashmir. I was watching the news and also heard something related to this topic. As each year passes, the number of students attending/applying for universities is increasing. Since universities are businesses, they are realizing that more students continue their education instead of working. As more and more jobs come unavailable, people realize how important an education is. An increase in pricing is a smart idea, but is unfortunate for those of us attending universities. The demand is increasing and places like UBC and SFU decide they need to do something about that. Hopefully the education that we receive will pay off!
– Sabrina Rai
[…] could be explained, according to Kash Kaur’s blog, as the students having weak buyer power. We, as individual students, cannot go up to the dean and […]
Kash,
I wrote a blog on this blog! It’s so interesting and relevant at the same time to our lives, come check out my blog!
Vivian
Universities definitely have too much supplier power these days, especially with increasing demand from international students as well as domestic students. Too many students are competing for too few spots in the limited amount of seats in universities. Just look at how crowded lecture halls and libraries have become here at UBC! The sad thing is, there’s little we can do about it. Us “buyers” don’t have any alternatives. Education, unfortunately, is an inelastic good.
[…] recently came across a very interesting post by fellow Sauder blogger Kashmir on the mystery of increasing tuition fees. As poor stduents who can barely scrape enough together to make ends meet, undergraduates […]