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Reducing product diversity in higher education

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  • Kelchtermans, Stijn

    ()
    (Hogeschool-Universiteit Brussel (HUB), Belgium
    Katholieke Universiteit Leuven, Belgium)

  • Verboven, Frank

    ()
    (Katholieke Universiteit Leuven, Belgium
    C.E.P.R., London, United Kingdom)

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.

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Bibliographic Info

Paper provided by Hogeschool-Universiteit Brussel, Faculteit Economie en Management in its series Working Papers with number 2007/14.

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Length: 33 pages
Date of creation: Sep 2007
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Handle: RePEc:hub:wpecon:200714

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Web page: http://research.hubrussel.be
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  1. Ted Bergstrom & Judy Roberts & Dan Rubinfeld & Perry Shapiro, 1988. "A Test for Efficiency in the Supply of Local Public Education," Papers _036, University of Michigan, Department of Economics.
  2. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
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  10. DEL REY, Elena, . "Teaching versus research: a model of state university competition," CORE Discussion Papers RP -1501, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  13. Bergstrom, Theodore C. & Roberts, Judith A. & Rubinfeld, Daniel L. & Shapiro, Perry, 1988. "A test for efficiency in the supply of public education," Journal of Public Economics, Elsevier, vol. 35(3), pages 289-307, April.
  14. Kelchtermans, Stijn & Verboven, Frank, 2006. "Participation and Schooling in a Public System of Higher Education," CEPR Discussion Papers 5690, C.E.P.R. Discussion Papers.
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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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