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.