Concentrated or Fragmented? The U.S. Market for Online Higher Education

John J. Cheslock () and Ozan Jaquette ()
Additional contact information
John J. Cheslock: Pennsylvania State University
Ozan Jaquette: UCLA

Research in Higher Education, 2022, vol. 63, issue 1, No 2, 33-59

Abstract: Abstract As the financial challenges facing the U.S higher education industry mount, colleges and universities seek new activities that can improve their financial situation. Online education programs are often viewed as a promising option due to growing student interest and the substantial net revenue generated by early entrants that leveraged economies of scale and scope. The number of schools that can experience similar outcomes will depend upon whether the online market is primarily concentrated, with a small number of higher education institutions enrolling most students, rather than fragmented, with large numbers of institutions enrolling meaningful amounts of online students. We examine this topic by providing the first detailed study of market concentration in online education. We first introduce a theory from economics, Sutton’s model of endogenous fixed costs, to the higher education literature to highlight key dynamics that shape concentration levels. Using institution-level enrollment data for the population of Title IV postsecondary institutions, we then empirically examine concentration levels in online education. We find that relative to in-person education, national online enrollment patterns are heavily concentrated. The online market has a distinctive structure, consisting of a small number of large national providers and a large number of small local providers. Online enrollment patterns became less concentrated between Fall 2012 and Fall 2018 due to major enrollment declines of large for-profit providers. Concentration levels, however, plateaued by the end of the period due to rapid enrollment growth at large national nonprofit providers.

Keywords: Online education; Enrollment; University finances; Economics of education (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11162-021-09639-7 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:reihed:v:63:y:2022:i:1:d:10.1007_s11162-021-09639-7

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/11162

DOI: 10.1007/s11162-021-09639-7

Access Statistics for this article

Research in Higher Education is currently edited by Robert K. Toutkoushian

More articles in Research in Higher Education from Springer, Association for Institutional Research
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().