Price collusion or competition in US higher education

How geographical neighboring competitors influence the strategic price behaviors of universities is still unclear because previous studies assume spatial independence between universities. Using data from the National Center for Education Statistics college navigator dataset, this study shows that the price of one university is spatially autocorrelated to its neighboring competitors and such neighborhood structure induces cooperation Nash equilibrium in a spatial price game. In the spatial price game of universities the possibility of the cooperation solution is about 76%, while that of the defeat solution is about 24%. This study demonstrates that the relation between price difference and geographical distance of universities is an inverse U-shaped curve rather than a line.