Universities’ Attractiveness and Grading Policies: A Spatial Competition Model

Abstract

This article compares two different views about universities’ attractiveness and grading policies. On the one side, inflating grades should be a suitable strategy in order to attract students to a certain university. On the other side, soft grading policies damage departments’ reputation, so discouraging students’ applications. From this perspective, students are really interested in the quality of courses and the socio-economic characteristics of the territories in which universities are settled. We propose a spatial competition model, showing that grading inflation is a reaction to adverse conditions, aimed at balancing the distortions generated by fees level and differences in the socio-economic characteristics of the locations.