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Editor's Choice Competing in the Higher Education Market: Empirical Evidence for Economies of Scale and Scope in German Higher Education Institutions

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  • Maria Olivares
  • Heike Wetzel

Abstract

Since the late 1990s, the European higher education system has had to face deep structural changes. With the public authorities seeking to create an environment of quasi-markets in the higher education sector, the increased competition induced by recent reforms has pushed all publicly financed higher education institutions (HEIs) to use their resources more efficiently. HEIs increasingly now aim at differentiating themselves from their competitors in terms of the range of outputs they produce. Assuming that different market positioning strategies will have different effects on the performance of HEIs, this article explores the existence of economies of scale and scope in the German higher education sector. Using an input-oriented distance function approach, we estimate the economies of scale and scope and the technical efficiency for 154 German HEIs from 2001 through 2007. Our results suggest that comprehensive universities should indeed orientate their activities to the concept of a full-university that combines teaching and research activities across a broad range of subjects. In contrast, praxis-oriented small and medium-sized universities of applied sciences should specialize in the teaching and research activities they conduct. (JEL codes: L25, I23, D24)

Suggested Citation

  • Maria Olivares & Heike Wetzel, 2014. "Editor's Choice Competing in the Higher Education Market: Empirical Evidence for Economies of Scale and Scope in German Higher Education Institutions," CESifo Economic Studies, CESifo, vol. 60(4), pages 653-680.
  • Handle: RePEc:oup:cesifo:v:60:y:2014:i:4:p:653-680.
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    Cited by:

    1. Calogero Guccio & Marco Ferdinando Martorana & Luisa Monaco, 2016. "Evaluating the impact of the Bologna Process on the efficiency convergence of Italian universities: a non-parametric frontier approach," Journal of Productivity Analysis, Springer, vol. 45(3), pages 275-298, June.
    2. Liang-Cheng Zhang & Andrew C. Worthington, 2018. "Explaining Estimated Economies of Scale and Scope in Higher Education: A Meta-Regression Analysis," Research in Higher Education, Springer;Association for Institutional Research, vol. 59(2), pages 156-173, March.
    3. repec:eee:infome:v:11:y:2017:i:3:p:613-628 is not listed on IDEAS
    4. repec:eee:soceps:v:62:y:2018:i:c:p:104-120 is not listed on IDEAS
    5. Maria Olivares & Andrea Schenker-Wicki, 2012. "The Dynamics of Productivity in the Swiss and German University Sector: A Non-Parametric Analysis that Accounts for Heterogeneous Production," Working Papers 309, University of Zurich, Department of Business Administration (IBW).
    6. Gralka, Sabine, 2016. "Persistent inefficiency in the higher education sector: Evidence from Germany," CEPIE Working Papers 06/16, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    7. Wohlrabe, Klaus & Bornmann, Lutz & de Moya Anegon, Felix, 2017. "Wie effizient sind Universitäten in Deutschland, deren Zukunftskonzepte im Rahmen der Exzellenzinitiative ausgezeichnet wurden? Ein empirischer Vergleich von Input- und Output-Daten zur Forschung
      [
      ," MPRA Paper 76218, University Library of Munich, Germany.
    8. Klaus Wohlrabe & Lutz Bornmann & Sabine Gralka & Felix de Moya Anegon, 2018. "Wie effizient forschen Universitäten in Deutschland, deren Zukunftskonzepte im Rahmen der Exzellenzinitiative ausgezeichnet wurden?," ifo Working Paper Series 253, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    9. Gralka, Sabine & Wohlrabe, Klaus & Bornmann, Lutz, 2017. "The Completion Shift of German Universities of Applied Sciences," MPRA Paper 82794, University Library of Munich, Germany.
    10. Calogero Guccio & Marco Ferdinando Martorana & Isidoro Mazza, 2016. "Efficiency assessment and convergence in teaching and research in Italian public universities," Scientometrics, Springer;Akadémiai Kiadó, vol. 107(3), pages 1063-1094, June.
    11. repec:kap:jtecht:v:42:y:2017:i:5:d:10.1007_s10961-016-9476-5 is not listed on IDEAS
    12. Thomas Bolli & Mehdi Farsi, 2015. "The dynamics of productivity in Swiss universities," Journal of Productivity Analysis, Springer, vol. 44(1), pages 21-38, August.
    13. repec:spr:scient:v:97:y:2013:i:2:d:10.1007_s11192-013-0986-8 is not listed on IDEAS
    14. Solange Alfinito & Manoel Brod Siqueira & Claudio V. Torres, 2016. "The student’s choice based on consumer psychology: an analysis applied to higher education institutions of Brazil," International Review on Public and Nonprofit Marketing, Springer;International Association of Public and Non-Profit Marketing, vol. 13(2), pages 185-201, July.

    More about this item

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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