Location: 360 Heady Hall

Description: Peter Orazem and Darin Wohlgemuth
"Do Liberal Arts Colleges Maximize Profit?"

Abstract: Liberal Arts Colleges are nonprofit institutions but they have great capacity to price discriminate compared to most service providers.  This study uses data on revenue, cost, tuition and scholarships at liberal arts colleges from 2004-2014 to estimate each college’s marginal revenue and marginal cost of adding an additional student and to identify each college’s elasticity of demand.  This information determines each college’s profit maximizing enrollment and tuition.  Our initial results show that almost all schools price in the elastic portion of their demand curves, a necessary but not sufficient condition for profit maximization. 

Contact Person: John Winters