Reducing product diversity in higher education

Stijn Kelchtermans and Frank Verboven

No 2007/14, Working Papers from Hogeschool-Universiteit Brussel, Faculteit Economie en Management

Abstract: Public systems of higher education have recently attempted to cut costs by providing .nancial incentives to institutions who reduce the diversity of their programs. We study the pro and welfare e¤ects of reducing product diversity in higher education, against the background of a funding system reform in Flanders (Belgium). We find that dropping duplicated programs at individual institutions tends to be socially undesirable, due to the limited fixed cost and variable cost savings and the students low willingness to travel to other institutions. Furthermore, we find that the financial incentives o¤ered to drop programs may be very ineffective, leading to both undesirable reform and undesirable status quo. These fondings emphasize the complexities in regulating product diversity in higher education, and serve as a word of caution towards the various decentralized .nancial incentive schemes that have recently been introduced.

JEL-codes: C25 I2 I23 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2007-09
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Related works:
Working Paper: Reducing Product Diversity in Higher Education (2007)
Working Paper: Reducing product diversity in higher education (2007)
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