In this dissertation I test a series of hypotheses on parents' attitudes and behavior, and schools' responses to competition in a universal school voucher system based primarily on Chubb and Moe's (1990) theory of the effect of bureaucratic versus market accountability in schooling and on Milton Friedman's (1962) proposal of market reform in education. I empirically investigate parental sorting across schools, parents' satisfaction with their child's schooling experience, and parents' perceptions of their options in case of school failure. In addition, I empirically investigate schools' perceptions of and reactions to school competition under universal school choice. Regarding parental choice, I find that parents are screened with respect to their demographics, which may lead to self-screening and exclusion of a portion of the universe of schools from the choice set based on non-academic criteria. Examining parents' choice sets with respect to the geographical location of their choices, I find that parents disproportionately choose schools in their township, and only those who seem to have the ability to be mobile include schools from other townships in their choice sets. I also check to see if parents tend to flee from poor neighborhoods to schools in wealthier neighborhoods. I find no supporting evidence on the universal school vouchers' ability to give parents living in poor neighborhoods the incentive to change their students' educational environment. Regarding schools' perceptions of competition, public schools seem to perceive significantly more competition in the environment compared to schools in other sectors. This perception may put pressure on them for improvement if the competition revolves around academics. However, descriptive analyses of school principals' choice sets show that they perceive mostly schools with higher socio-economic status (SES) as their rivals, which may suggest that public schools fear losing students with higher SES to schools with majority high SES parents. Regarding parental satisfaction, I find that, despite decreases over time, parents' satisfaction with private voucher schools remain higher compared to public school parents at any point in the panel. Although what goes into overall parental satisfaction is unclear, it is the general satisfaction with the private voucher school sector that can create a constituency around the sustenance of school voucher reform. I also tried to get traction of the meaning of private voucher school parents' high overall evaluations of their schools by looking at their satisfaction with specific features of their schools. The results suggest that private voucher schools are not significantly more satisfied with their schools' academic quality, teacher, or principal compared to public school parents. Rather, they seem to like those aspects of the school less directly related to academic quality such as extracurricular activities. The results show that private voucher schools' accountability to parents may not give schools the incentive to improve their academics more compared to public schools, or unleash competitive pressures on public schools based on academics. Instead, they may compete with public schools based on less-academic features of the school.