Economies of Scale and Scope for Canadian Universities

We estimate measures of economies of scale and scope for a sample of 48 Canadian universities that produce multiple outputs. Estimates have not been previously attempted for Canadian universities to our knowledge. Declining financial support from provincial governments makes finding cost efficiencies a priority for policy makers. Our approach features two useful innovations: by using panel data for 2011–2019, instead of a cross-section for a single year, there is more variation in the variables to estimate a multi-product trans-log cost function; and we consider the appropriateness of using research funding as a measure of research output by alternatively using publication counts. We did not find economies of scale at any university size but did find ray economies of scale up to 60% of the median university size. Economies of scope were evident up to roughly 1.2 times the median university size. No significant differences in results were found between using publication counts or research funding. Small institutions that cater to different outputs could be merged into comprehensive institutions. The lack of economies of scope for Canada’s larger universities suggests that they could be broken up into smaller specialized institutions if cost efficiencies are a priority.