The effects of a branch campus

We examine the effects of a branch campus on the social welfare of the host country and the foreign university. Overall, we find that a branch campus increases both the domestic social welfare (measured by the aggregate student utility) and the tuition revenue of the foreign university. The effect of a branch campus on the brain drain is determined by the quality of the branch campus. A larger increase in labor emigration is observed when the quality of the branch campus improves. However, if the quality of the branch campus is sufficiently high, then fewer students will choose to study abroad and the brain drain problem is alleviated. The choice of the quality of the branch campus, therefore, has important policy implications.