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Reducing product diversity in higher education

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  • Stijn Kelchtermans
  • Frank Verboven

Abstract

Public systems of higher education have recently attempted to cut costs by providing financial incentives to institutions who reduce the diversity of their programs. We study the profit and welfare effects 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 offered to drop programs may be very ineffective, leading to both undesirable reform and undesirable status quo. These findings emphasize the complexities in regulating product diversity in higher education, and serve as a word of caution towards the various decentralized financial incentive schemes that have recently been introduced.

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Bibliographic Info

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces0726.

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Date of creation: Sep 2007
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Handle: RePEc:ete:ceswps:ces0726

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Keywords: product diversity; higher education;

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References

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  1. Bierlaire, M. & Bolduc, D. & McFadden, D., 2008. "The estimation of generalized extreme value models from choice-based samples," Transportation Research Part B: Methodological, Elsevier, vol. 42(4), pages 381-394, May.
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  3. Kelchtermans, Stijn & Verboven, Frank, 2007. "Participation and Schooling in a Public System of Higher Education," Working Papers 2007/08, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  4. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, October.
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Cited by:
  1. Demange, Gabrielle & Fenge, Robert & Uebelmesser, Silke, 2008. "The Provision of Higher Education in a Global World - Analysis and Policy Implications," CEPREMAP Working Papers (Docweb) 0806, CEPREMAP.

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