Can Grading Policies influence the competition among Universities of different sizes?

One of the main commonplaces about students’ population at the Higher Education level is that freshmen are attracted by universities which adopt soft grading policies, so to achieve their graduation in the easiest way as possible. At the same time, very little evidences are generally provided about the effect that such a strategy can have on the universities, if adopted. Thanks to the Italian University Register (ANS), we analyze the cohorts of Italian freshmen between 2010-2012. As it will be shown, if universities would compete each other through grading policies, only those which already have a competitive advantage can benefit from this strategy, while the others might only slide down into a vicious circle.