The Road to Hell Is Paved with Good Intentions: Modeling Grant Competition between Universities

Frank Daumann (), Florian Follert and Alfred Wassermann
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Frank Daumann: Faculty of Social and Behavioural Sciences, Friedrich-Schiller-University Jena, 07743 Jena, Germany
Florian Follert: Faculty of Management, Seeburg Castle University, 5201 Seekirchen, Austria
Alfred Wassermann: Department of Mathematics, University of Bayreuth, 95440 Bayreuth, Germany

Economies, 2023, vol. 11, issue 3, 1-13

Abstract: Competition is a core feature of science and has for some time also been viewed by institutions in the higher education sector, as well as the state, as an incentive to produce scientific output. Due to scarce financial resources third-party funding plays an increasingly important role. However, the race for the coveted grants also has its downsides and can lead to a loss of efficiency. To advance the discussion concerning grant competition we present a rent-seeking model that helps to understand the crucial factors influencing overall welfare. We show that the extent of the increase in productivity of independent research triggered by the grant competition, the extent of administrative expenses and the productivity of the research financed by the grant are decisive. Our main implications for policy-makers and university managers are that competition for third-party funding brings positive and negative effects and therefore, for the individual situation of the university, it has to be carefully considered whether scarce resources are invested in applications and that grant procedures should be designed in such a way that both a Matthew effect and a path-dependency effect are avoided.

Keywords: higher education; research; universities; rent seeking; public finance; funding; grants (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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