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Expanding access to preschool education is a particularly important policy issue in developing countries, where enrollment rates are generally much lower, and where private institutions constitute a much larger share of the formal preschool sector, than in developed countries. This paper examines if an expansion in the supply of public preschool crowds-out private enrollment using rich data for municipalities in Brazil from 2000 to 2006, where federal transfers to local governments change discontinuously with given population thresholds. Results from a regression-discontinuity design reveal that larger federal transfers lead to a significant expansion of local public preschool services, but show no evidence of crowding-out of private enrollment, nor of negative impacts on the quality of private providers. This finding is consistent with a theory in which households differ in willingness-to-pay for preschool services, and private suppliers optimally adjust prices in response to an expansion of lower-quality, free-of-charge public supply. In the context of the model, the absence of crowding-out effects of more public preschool providers can be rationalized by the existence of relatively large differences in willingness-to-pay for preschool services across different demand segments. Our theoretical and empirical findings therefore suggest that in developing country settings characterized by relatively high income inequality, an expansion in public preschool supply will likely significantly increase enrollment among the poorest segments of society, and need not have adverse effects on the quantity or quality of local private supply.

This paper examines whether an expansion in the supply of public preschool crowds out private enrollment. The paper uses rich data for municipalities in Brazil from 2000 to 2006, where federal transfers to local governments change discontinuously with given population thresholds. The results from a regression-discontinuity design reveal that larger federal transfers lead to a significant expansion of local public preschool services, but show no evidence of crowding out of private enrollment. This finding is consistent with a theory in which households differ in their willingness to pay for preschool services, and private suppliers optimally adjust prices in response to an expansion of lower-quality, free-of-charge public supply.

This paper examines whether an expansion in the supply of public preschool crowds out private enrollment, using rich data for municipalities in Brazil from 2000-2006, where federal transfers to local governments change discontinuously with given population thresholds. Results from a regression-discontinuity design reveal that larger federal transfers lead to a significant expansion of local public preschool services, but show no effects on the quantity or quality of private provision. These findings are consistent with a theory in which households differ in willingness to pay for preschool services, and private suppliers optimally adjust prices in response to an expansion of lower-quality, free-of-charge public supply.

We examine if an expansion in the supply of public preschool crowds-out private enrollment using rich data for municipalities in Brazil from 2000-2006, where federal transfers to local governments change discontinuously with given population thresholds. Results from a regression-discontinuity design reveal that larger federal transfers lead to a significant expansion of local public preschool services, but show no effects on the quantity or quality of private provision. These findings are consistent with a theory in which households differ in willingness-to-pay for preschool services, and private suppliers optimally adjust prices in response to an expansion of lower-quality, free-of-charge public supply. ; COMPETE; QREN; FEDER; Fundação para a Ciência e a Tecnologia ...

Abstract This paper develops a two‐country, general equilibrium model of oligopoly in which the degree of horizontal product differentiation is endogenously determined by firms' strategic investments in product innovation. Consumers seek variety and product innovation is more skill intensive than production. Stronger import competition increases innovation incentives, and thereby the relative demand for skill. An intra‐industry trade expansion following trade liberalization can therefore increase wage inequality between skilled and unskilled workers. As long as some industries remain shielded from international competition, the welfare implications of globalization are found to be generally ambiguous.

We study ex post outsourcing of production in an imperfectly discriminating contest, interpreted here as a research tournament or a procurement contest for being awarded some production contract. We find that the possibility of outsourcing increases competition between the contestants, leading to higher total contest effort, if the contest winner is expected to obtain a sufficiently large share of ex post outsourcing rents. Under reasonable assumptions, outsourcing tends also to increase the number of active contestants, strengthening the case for outsourcing to increase total contest effort. If such effort is socially wasteful, outsourcing creates a welfare trade-off between ex ante and ex post efficiency. Adapted from the source document.