Education Consumption in an Emerging Market

Private schools serve a significant section of the Indian student population in the K-12 market. This share is likely to increase with the country's growth as households-both rich and poor clamor for quality education. This paper seeks to understand the determinants of schooling (public and private) in rural India. We present and estimate a discretecontinuous model of household school choice and educational spending decisions. Our estimates give insights on (1) households and individual determinants on schooling demand in rural India; (2) the tradeoff off between marketing mix variables such as fees and transportation facilities; and (3) how private-public partnerships through government subsidies for private schools can expand category consumption by increasing total school enrolment.