Regulating for-profit schools, the effects of dividend caps and increased monitoring on the Swedish school market

Sammanfattning: This paper examines the Swedish upper secondary school market, where free school choice and universal school vouchers have been introduced. We present a micro-economic model where students with heterogeneous preferences choose between "good" and "bad" for-profit schools. The model is then used to study how two commonly suggested measures, dividend caps and increased monitoring, would affect the equilibrium on this idealised market. We find that increased monitoring would lead to more students choosing "good" schools. However, if monitoring is not increased enough, some students will still choose "bad" schools and will be worse off in this new equilibrium. As for dividend caps, we conclude that this measure could force all "bad" for-profit schools off the market, given certain prerequisites.