ABSTRACT
In this chapter we examine the behaviour of schools in local markets and the impact of this behaviour on educational outcomes. We concentrate here on the behaviour of public schools in the open enrolment system introduced in England. The chapter is organised in three main sections which consider the effect of schooling markets on productive efficiency, the distribution of educational benefits from education across individuals and the diversity of outcomes provided by the school system. Policies to increase the role of market forces in schooling have been based on a belief that competition between schools will improve the schooling system according to each of these criteria. Critics of these policies believe the opposite. To review these debates we organise each section into two parts. The first part reviews predictions of alternative theories and the second part considers evidence pertinent to these predictions. We conclude the chapter with a section devoted to an evaluation of the theories.
