Public Education via Exclusive Territories

Abstract

It is argued in the literature that, under completely free choice and market competition, the public benefits from education would be underproduced because, although each family will benefit from the social indoctrination of other people's children, it will concentrate on securing primarily private benefits from the schooling of its own. Similarly, it has been contended that, to resolve this free rider problem, education should be supplied on a noncompetitive basis via exclusive territories (zones). This article shows that the full logic of this type of welfare argument calls not for an exclusive public system but for some public and some private schooling for each and every child. Because this supply pattern is not found in the real world, the remaining alternative explanation for the continued supply of public schooling via exclusive territories is the simple presence of rent seekers on the supply side who enjoy monopoly conditions.