The paper discusses the impact of ability grouping in secondary education on student incentives. Education provides a signal on unobservable ability for employers and improves productivity after education. Selection sets better incentives in primary education and allows for improved peer group...

We analyze educational institutions' incentives to set up demanding or lax curricula in duopolistic markets for education with endogenous enrolment of students. Comparing the case of regulated tuition fees with an unregulated market, we identify the following inefficiencies: Under regulated...