This paper tests for financial constraints as a market failure in education in a low-income country. In an experimental setup, unconditional cash grants are allocated to one private school or all private schools in a village. Enrollment increases in both treatments, accompanied by infrastructure investments. However, test scores and fees only increase in the setting of all private schools along with higher teacher wages. This differential impact follows from a canonical oligopoly model with capacity constraints and endogenous quality: greater financial saturation crowds-in quality investments. The findings of higher social surplus in the setting of all private schools, but greater private returns in the setting of one private school underscore the importance of leveraging market structure in designing educational subsidies.

中文翻译：

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事前准备：私立学校无条件拨款的均衡效应

本文测试了作为低收入国家教育市场失灵的财政限制。在实验设置中，无条件现金赠款分配给一个村庄中的一所私立学校或所有私立学校。两种治疗方法的入学率都有所增加，同时还进行了基础设施投资。但是，所有私立学校的考试分数和费用只会随着教师工资的提高而增加。这种不同的影响来自具有容量约束和内生质量的规范寡头模型：更大的金融饱和度吸引了高质量的投资。在所有私立学校中，社会剩余都较高的结果，但在一所私立学校中，私立学校的回报较高，这一发现突显了在设计教育补贴时利用市场结构的重要性。