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Reducing product diversity in higher education

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  • Kelchtermans, Stijn

    () (Hogeschool-Universiteit Brussel (HUB), Belgium
    Katholieke Universiteit Leuven, Belgium)

  • Verboven, Frank

    () (Katholieke Universiteit Leuven, Belgium
    C.E.P.R., London, United Kingdom)

Abstract

Public systems of higher education have recently attempted to cut costs by providing .nancial incentives to institutions who reduce the diversity of their programs. We study the pro and welfare e¤ects of reducing product diversity in higher education, against the background of a funding system reform in Flanders (Belgium). We find that dropping duplicated programs at individual institutions tends to be socially undesirable, due to the limited fixed cost and variable cost savings and the students low willingness to travel to other institutions. Furthermore, we find that the financial incentives o¤ered to drop programs may be very ineffective, leading to both undesirable reform and undesirable status quo. These fondings emphasize the complexities in regulating product diversity in higher education, and serve as a word of caution towards the various decentralized .nancial incentive schemes that have recently been introduced.

Suggested Citation

  • Kelchtermans, Stijn & Verboven, Frank, 2007. "Reducing product diversity in higher education," Working Papers 2007/14, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    • Handle: RePEc:hub:wpecon:200714
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    References listed on IDEAS

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    Cited by:

    1. Stijn Kelchtermans & Frank Verboven, 2008. "Regulation of Program Supply in Higher Education: Lessons from a Funding System Reform in Flanders," CESifo Economic Studies, CESifo, vol. 54(2), pages 204-228.

    More about this item

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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