Maybe students that applied for vouchers were attending excellent public schools rather than mediocre or bad ones, so the private schools that received voucher students were up against the cream of Louisiana public schools. The Abdulkdiroglu et al. study rejected this hypothesis with the finding that Louisiana public schools attended by students applying for a voucher were below average in the state. On the recent NAEP, Louisiana ranked 43rd among states in reading scores of its fourth graders and 49th among states in math scores of its eighth graders. To test the effectiveness of the instruction of voucher students in private schools by comparing the students’ learning outcomes with those of similar students in below-average public schools in Louisiana is not a high bar.
In general, crowding out might take place due to two reasons: 1) when domestic firms disappear because of higher efficiency and better product quality of foreign subsidiaries, and 2) when they are wiped out because these foreign affiliates have better access to financial resources and/or engage in anticompetitive practices. In the first case, the net impact on welfare is positive as firms with higher efficiency and better product quality contribute to the economic development of the host country. But in the second case, there is welfare loss and governments intervene through different channels in order to help the local firms. For example, they might establish or subsidize financing for domestic small and medium firms (Bhalla and Ramu, 2005).