Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 15

The University of Medford pays the full tuition for the children of faculty members at any university in the world. Recently, this policy has received bad publicity. The argument has been made that people in other occupations have to pay the tuition costs for their children and so should college professors. According to this argument, it is not fair to have these relatively well paid people get subsidized in this manner. The board of trustees of the University of Medford has been asked to reconsider this policy. Provide an economic argument to explain why the board of trustees might want to continue this policy.