Evidence Of Competition Between Law Schools

The purpose of this paper is to measure how competition affects tuition rates of law schools. I hypothesize that the tuition rates will go up as concentration of law schools increase. To examine how tuition varies with competition, I need to measure market structure. A variety of measures are available, such as C4, C8, and HHI; all of which have some relationship to the degree of competitiveness in an industry. I primarily use HHI as the concentration measure in this paper. I make two models for my thesis. In my first model I use a statewide measure of competition, assuming each school competes against all the other schools in its state with the exception of the most elite schools. Then I revise my model. I assume that according to the Location model, schools located close to one another geographically and qualitatively compete with one another. Schools whose qualities differ enough and which are located far from each other are not likely to be in vigorous competition with each other. I first estimate my model using the ordinary least squares (OLS) method. Due to potential endogeneity problem in the OLS method, I also use the Instrumental Variable approach. In both of my models concentration affects tuition negatively.