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September 15, 2003
Independent pricing

A posh cartel?

Independent schools today strongly denied that they had engaged in price-fixing to increase fees at the country's most prestigious institutions.

Stephen Pollard says it's just envious statists trying to hobble the private sector, and Natalie Solent, as a nod to the new Pollard website, picks out this quote:

You read that right: Sweden. The most egalitarian people on Earth understand what British opponents of school choice do not: choice benefits, above all, the poor. Swedish councils are obliged to give a voucher representing 75 per cent of the average cost per student in municipal schools to any parent who wants one.

I've long suspected that Sweden is a more capitalist place than it likes to let on. There's a lot more to that place than Volvo, SAAB and Social Services.

As for the price fixing accusation, I guess Pollard is right: whether the independents collude or not, the market is still in charge. There are alternatives to these independent schools. But if the independents are putting their prices up, what does that say about the quality of their state rivals?

The independents don't have an educational monopoly. The statist critics of the independents, on the other hand, do want a monopoly. For the state.

Posted by Brian Micklethwait at 11:55 PM
Category: The private sector

The whole basis of such competition enquiries is suspect, in any case. Price-fixing between themselves by a cartel of existing players doesn't prevent competition from new ones. In the case of schools there's nothing they can do to raise the barriers to entry. The education department, OFSTED, local planning officers (and now the OFT) will do that.

Comment by: Guy Herbert on September 16, 2003 01:02 PM

I've wondered about Sweden too. I am not enthusiastic about their welfare state, but everything I've heard about their education system is (relatively, anyway) good.

If I recall correctly, they have a short school year, school isn't required until age 7, and they don't push academics for younger kids. Also, a guy on a web board a couple years ago said they were having a national debate on abolishing letter grades entirely. Good stuff.

Comment by: Matt on September 17, 2003 02:02 AM

Re: Price Fixing
You're missing the point Guy, the consumer is being ripped off by an abuse of market power, regardless of how low or high the barriers to entry are.

Consider the (now defunct) Overlap Group of universities in the US.

Comment by: William on September 17, 2003 10:32 AM
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