Stratification of Public Universities and Students’ Segregation

We present a model which allows us to show that stratification of public universities, according to the quality they offer and the quality of students they select, is a plausible result even in a public university system where tuition fees are uniform and decided by the administration. This result is similar to that observed in private and competitive university systems. We prove that it is very unlikely that segregation and stratification could be avoided by subsidizing those universities that are more inefficient. We show also that even if stratification and segregation could be removed through subsidies, it would be at the cost of reducing quality of education at the whole university system.