University merging process
AbstractThere is a recent tendency toward encouraging universities to merge. This policy is based on the idea that mergers create synergy gains that enhance universities’ prestige by increasing their international visibility. However, this process may reduce competition for both research funds and professors. This paper analyzes whether or not mergers among universities are optimal from an aggregate excellence point of view. We find that the relationship between cost differentials of competing universities, the amount of research funds and universities’ recruitment standard plays a key role when comparing aggregate excellence in a merging and a competition settings. In particular, we show that the higher the heterogeneity between potential merger institutions in terms of their reputation the greater the amount of funds needed to make mergers profitable.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2013-01.
Length: 37 pages
Date of creation: Jan 2013
Date of revision:
Publication status: Published by Ivie
Higher Education; University Competition; Mergers; University Funding System.;
Find related papers by JEL classification:
- H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
- I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
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