[wave_function]

This seems to be the same concept as “the market for lemons”

https://en.wikipedia.org/wiki/The_Market_for_Lemons

Parents of low-cost students can send their kids to the “high information market” (the schools that can reject high-cost students). Parents of high-cost students have to send their kids to the “low-information market” (the public school that can’t reject high-cost students). Any school that can reject high-cost students can make themselves more attractive to low-cost students, which then feeds on itself, as the “low-information” school ends up with more and more high-cost students.

In this case, both schools have the same information, it’s just that one school isn’t allowed to act on it.

[TimPC]

There are similarities undoubtedly. I think the major difference is the source of the distorted subsidy. In the market for lemons bad cars are subsidized by people thinking they might be good ones. In the voucher system low cost students are handed a massive subsidy by government pretending they have average cost. I think the voucher market is more dangerous since government ends up on the hook for all the increased costs of education because of the artificial subsidy.