Transfer pricing and illini bucks

As mentioned in the assignment, University of Illinois basically allocates its resources to students based on two criteria, first come first serve and some priorities. The key idea of this system is to ensure the equity for the resources allocation. We pay a similar amount of tuition for  U of I and whoever comes first deserves the first serve and for most engineering students and business students, they enjoy certain priorities since they pay more for them. In my opinion, the appearance of illini bucks will ruin the equity of the system. During the analysis of the effect of illini bucks, we can focus on its usage on registering courses ( it could be the most popular one ) and then expends the analysis to a variety of priorities it can buy.

Someone may argues that we pay the same tuition but senior students enjoy the benefit of choosing class first, so it is not fair at the first time. But in my opinion, I does not break the idea of equity since it can be seen as the extra benefit for keeping paying for a long time and after all everyone has the opportunity to enjoy this welfare. So why students would want to pay for the right of registering earlier? It is important for students to register their favorite classes successfully because getting good quality education is the main reason of coming to this university and taking preferred classes with preferred professors will affect the willingness of students to study. Before illini bucks, the system is relatively fair to all students since James Scholar Program (students who is in this program can register courses early) is available for most students. Supposing university gave each students the same amount of illini bucks which can be used for moving to the first line of registering classes, it is not difficult to predict that if the university sets the price too low, most students will use their illini bucks to maximum their utility on this. As a result, although efficiency is seemingly achieved because whoever wants to learn gets the chance, those who deserve the priority will be sacrificed. Senior students will face the risk that can not register the class needed to finish the program and their graduation plan may get delayed. If the university sets the price too high, especially when it is higher than the amount allocated to each one, there will be a even worse scenery in which only those who are rich can enjoy the priority. Once the illini bucks charged for the right exceeds students’ utility for this right, they tend to give up opportunity and since there is always someone who is rich enough and willing to pay for others’ illini bucks, the exchange will occur. If we consider all the priorities illini bucks could buy, it is a obviously valuable asset and in the end, the individual amount of illini bucks may could not pay for any service.

What is even worse is that the university is the only source of illini bucks. What will happen if only one dealer controls the demand of meth? He will definitely keep increasing the price until nothing more could be milked. It is not hard to imagine that in the end, the original amount of illini bucks assigned to students can not be used to buy any single service anymore which indicates that the equity of the system is completely destroyed. And what will happen if most students find they did not get the service and education they paid for ? They would seek a better education environment and service out of the former institution which means transferring to other universities or colleges. So in conclusion, the appearance of illini bucks could cause the imbalanced allocation inside the university and may finally force students to look for outside resources as an alternative.

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2 comments

  1. profarvan · October 6, 2014

    You say the Ililnibucks system would destroy the fairness of the current regime. But what if the priority allocation went first, then illinibucks could be used to buy places in an over subscribed class, where the student who gives up their space gets some (or all) of those Illinibucks for purchase on something else. Wouldn’t that both be fair and more efficient?

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  2. shiyuchen1992 · October 6, 2014

    It is true that it could be both fair and efficient for students who sold their seats for illini bucks but I think it is only true when they can afford those things with their illini bucks. This system has two features, one is the initial resources are equal for everyone and another is students can’t get anymore illini bucks expect by exchanging. So once it can be exchanged by paying money, the ultimate purchasing power is determined by the amount of money they have. As long as there is someone who have enough money and eager for the right, how many illini bucks on hand does not really matter. And it is true that students can pay for senior students to save the seat for them but the bad thing about this system is to make it official. It is like “If you have enough money, you can get whatever priority for sure” written on the school website.

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