In which DovBear makes the dismal science less dismal.
CWY asks: And why are schools different from anything else in regards to the market? Yes it's more difficult to open a school than a pizza store, but that doesn't make schools immune from market forces.
Not immune. Just less susceptible. As with almost all things, there is a hierarchy here.
In the perfect market the customer has perfect knowledge of the product, perfect knowledge of what the competitors offer, and equal ability to access them all. Also, in a perfect market, there are no barriers to competition, barriers like regulations, start-up costs, and so on.
Of course the perfect market never exists, but some markets (the market for pizza, for example) are going to be more perfect than others, and therefore more susceptible to market forces.
Education markets are less perfect because consumers can't make informed decisions (it's very difficult to predict how 12 years of schooling are going to affect your child, or to get real information about what a school might do 5 years down the road) and given the realities of geography, there are very few options a consumer can easily access. Also, it's hard for an entrepreneur to join the market because the start-up costs are formidable.
For these reasons, and others a wise man will see for himself, education markets are much less perfect; as a result schools are much less susceptible to market forces.