Market Competition, Public Good and Institutional Governance: Analyses of Portugal's Experience

The emergence of the market as a regulatory tool for the public sector and the promotion of competition among institutions are based upon the idea that they promote institutions’ responsiveness to society and a more efficient use of public funds. However, autonomous institutions forced to compete under market-like conditions may follow strategies aiming at “their own good”, especially when facing stringent financial conditions. This does not guarantee that the institutions’ strategic objectives will coincide or converge with the “public good” or with the government’s objectives. This opens the way for state intervention. In Portugal, the combined effect of the rapid expansion of the higher education system and the country’s decreasing birth rate has resulted in a situation where institutions compete strongly to attract students. This paper analyses the effect of this competition on the behaviour of both public and private institutions. It focuses on institutional policies for offering new study programmes and promoting the access of new students. It compares the behaviour of the public and private sectors to assess how far strong competition promotes similar attitudes from both sub-sectors, thus resulting in relaxing or even ignoring the pursuit of public good.