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Stochastic Cost Frontier and Inefficiency Estimates of Public and Private Universities: Does Government Matter?

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  • G. Sav

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Abstract

Stochastic frontier analysis is used to estimate operating cost inefficiencies of public and private non-profit universities in the U.S. while also accounting for the possible effects arising from differences in the degree of government ownership. Using panel data for four academic years, 2005–2009, inefficiencies are estimated under two model specifications. Results indicate that public universities are more cost efficient when environmental factors influence cost frontiers but private universities are the cost efficient institutions when those factors are determinants of inefficiency. Increased government funding does matter and increases private sector inefficiency but offers some efficiency improvements among public universities. Following the global financial crisis, there is evidence indicating a considerable slowdown in the inefficiency growth among both public and private universities. Copyright International Atlantic Economic Society 2012

Suggested Citation

  • G. Sav, 2012. "Stochastic Cost Frontier and Inefficiency Estimates of Public and Private Universities: Does Government Matter?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 18(2), pages 187-198, May.
  • Handle: RePEc:kap:iaecre:v:18:y:2012:i:2:p:187-198:10.1007/s11294-012-9353-4
    DOI: 10.1007/s11294-012-9353-4
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    Cited by:

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    2. Gralka, Sabine, 2018. "Stochastic frontier analysis in higher education: A systematic review," CEPIE Working Papers 05/18, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    3. Wolszczak-Derlacz, Joanna, 2017. "An evaluation and explanation of (in)efficiency in higher education institutions in Europe and the U.S. with the application of two-stage semi-parametric DEA," Research Policy, Elsevier, vol. 46(9), pages 1595-1605.

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    More about this item

    Keywords

    Cost inefficiency; Stochastic cost frontier; Government ownership; Universities; D2; I21; I22; I23; L3; C33;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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