Demand and Supply of Public School Quality in Metropolitan Areas: The Role of Private Schools

In this paper I investigate the role of private schools in the housing market and in the supply and demand for public schooling. I estimate public school-quality supply simultaneously with demand, which provides greater confidence in calculated demand elasticities than in single-equation studies. The price of public schools, private schools, and taxes all appear in the demand estimation and have elasticities of @ndash;0.19, 0.11, and –0.49, respectively. Public school–quality supply is responsive to private-school competition but not to competition from other public schools. The percentage of school-aged children attending private schools depresses house values holding public-schooling outcomes constant.