ABSTRACT
The system of selective admissions to colleges and universities that now dominates the prestige hierarchy of American higher education is largely the product of the last half of the twentieth century. This chapter reviews some publications that shed new light on these developments. They demonstrate that the market for high-ability students has powerfully affected the behavior of colleges and universities in the selective sector. All institutions of higher education delimit their constituencies and are buffeted to some extent by the vagaries of demography, but only in the selective sector does the number of applicants having some combination of high academic ability and capacity to pay the price of college become a market-shaping factor. Economists have tried to analyze the long-assumed fact that students, the consumers of higher education, are also important inputs to the educational production process. Specifically, high-ability students are believed to enhance the quality of education for their peers, and thus have a value to the college.
