Competing in the Higher Education Market: Empirical Evidence for Economies of Scale and Scope in German Higher Education Institutions

Maria Olivares () and Heike Wetzel

No 223, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: Since the late 1990s, the European higher education system has had to face deep structural changes. With the public authorities seeking to create an environment of quasi-markets in the higher education sector, the increased competition induced by recent reforms has pushed all publicly financed higher education institutions to use their resources more efficiently. Higher education institutions increasingly now aim at differentiating themselves from their competitors in terms of the range of outputs they produce. Assuming that different market positioning strategies will have different effects on the performance of higher education institutions, this paper explores the existence of economies of scale and scope in the German higher education sector. Using an input-oriented distance function approach, we estimate the economies of scale and scope and the technical efficiency for 154 German higher education institutions from 2001 through 2007. Our results suggest that comprehensive universities should indeed orientate their activities to the concept of a full-university that combines teaching and research activities across a broad range of subjects. In contrast, praxis-oriented small and medium-sized universities of applied sciences should specialise in the teaching and research activities they conduct.

Keywords: Higher Education Production; Economies of Scale and Scope; Technical Efficiency; Stochastic Frontier Analysis; Input Distance Function (search for similar items in EconPapers)
JEL-codes: D24 I23 L25 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2011-12
New Economics Papers: this item is included in nep-edu, nep-eff, nep-eur, nep-ind and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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