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Economic analysis of transnational education


  • Donald Lien


This paper considers the effects of a branch campus on the individual college education decision and the economic welfare of a developing country. There are a single domestic college and a single branch campus established by a foreign university. A graduate from the branch campus has an opportunity to emigrate and work abroad, earning a higher income, whereas a graduate from the domestic university is not allowed to work abroad. We derive the optimal quality of the branch campus for a profit-seeking operator and a benevolent government, respectively. Economic welfare consideration suggests that a low-quality branch campus is most probably beneficial whereas a high-quality branch campus may cause severe brain drain problems and be harmful to a developing country.

Suggested Citation

  • Donald Lien, 2008. "Economic analysis of transnational education," Education Economics, Taylor & Francis Journals, vol. 16(2), pages 149-166.
  • Handle: RePEc:taf:edecon:v:16:y:2008:i:2:p:149-166 DOI: 10.1080/09645290701273475

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    References listed on IDEAS

    1. Philip Andrew Stevens, 2005. "A Stochastic Frontier Analysis of English and Welsh Universities," Education Economics, Taylor & Francis Journals, vol. 13(4), pages 355-374.
    2. Izadi, Hooshang & Johnes, Geraint & Oskrochi, Reza & Crouchley, Robert, 2002. "Stochastic frontier estimation of a CES cost function: the case of higher education in Britain," Economics of Education Review, Elsevier, vol. 21(1), pages 63-71, February.
    3. Johnes, Geraint & Johnes, Jill, 2009. "Higher education institutions' costs and efficiency: Taking the decomposition a further step," Economics of Education Review, Elsevier, vol. 28(1), pages 107-113, February.
    4. Cohn, Elchanan & Rhine, Sherrie L W & Santos, Maria C, 1989. "Institutions of Higher Education as Multi-product Firms: Economies of Scale and Scope," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 284-290, May.
    5. Johnes, Geraint, 1997. "Costs and Industrial Structure in Contemporary British Higher Education," Economic Journal, Royal Economic Society, vol. 107(442), pages 727-737, May.
    6. Glass, J C & McKillop, Donal G & Hyndman, N, 1995. "Efficiency in the Provision of University Teaching and Research: An Empirical Analysis of UK Universities," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(1), pages 61-72, Jan.-Marc.
    7. de Groot, Hans & McMahon, Walter W & Volkwein, J Fredericks, 1991. "The Cost Structure of American Research Universities," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 424-431, August.
    8. Geraint Johnes, 1996. "Multi-product cost functions and the funding of tuition in UK universities," Applied Economics Letters, Taylor & Francis Journals, vol. 3(9), pages 557-561.
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    Cited by:

    1. Poyago-Theotoky Joanna & Tampieri Alessandro, 2016. "University Competition and Transnational Education: The Choice of Branch Campus," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 16(2), pages 739-766, June.

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    college education; branch campus; brain drain;


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