Researchers, policymakers, and parents are giving education reforms involving expanded school choice increased attention. Many view the heightened competition that would presumably result from such reforms as a panacea for the ills currently plaguing the public education system in the US. However, the present system is not devoid of competition even absent such reforms; public schools compete for students through the Tiebout (1956) process. Thus, this papers seeks to answer two questions: (i) Does competition alter the behavior of public school districts? and (ii) Do public school districts compete with neighboring public school districts? To answer such questions, we utilize panel data from Illinois over the period 1990 � 2000 and estimate a multi-dimensional mixed regressive, spatial autoregressive model. We find robust evidence that public school districts incorporate the educational input decisions of other public school districts in the same county into their decision calculus, thereby acting strategically when setting own input levels
