This quantitative study aims to contribute to the understanding of how increasing educational costs on the Swedish market for upper secondary schools can be explained. With insights from previous research, a multiple regression analysis is performed to answer if competition implicates economic efficiency, why are upper secondary school costs for municipalities increasing along with increasing competition on the Swedish school market? Data on municipality-level was collected for the period of 2000-2011 and the results show that increasing educational costs are explained by increasing competition. In addition, increasing pupils’ change of school and/or program, and increasing overcapacity are statistically significant predictors of increasing educational costs. Furthermore, this study contributes to previous research as it takes an extended view of competition and demonstrates that is well founded when evaluating the effect of competition on educational costs. In addition, the results indicates that there are additional aspects to address namely, that competition affects costs indirectly by creating more complex competitive conditions with regards to education providers’ possibility to plan and set dimensions of their operations.