Well, even supposing school is more about signaling than about education, parents still care about signaling. Why don’t they spend their entire education budget on schools, and get even better signaling? Your point makes the existence of expensive tutors even more mysterious, because you can’t use a tutor to signal your kid’s aptitude (most tutors take any customer who will pay.)
Your point about a coordination problem seems to be separate, and that’s what I was wondering as well. Could there be a market failure here? But I wanted to first see if there were hypotheses that make this state of affairs rational from an economic point of view.
Well, even supposing school is more about signaling than about education, parents still care about signaling. Why don’t they spend their entire education budget on schools, and get even better signaling? Your point makes the existence of expensive tutors even more mysterious, because you can’t use a tutor to signal your kid’s aptitude (most tutors take any customer who will pay.)
Your point about a coordination problem seems to be separate, and that’s what I was wondering as well. Could there be a market failure here? But I wanted to first see if there were hypotheses that make this state of affairs rational from an economic point of view.