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University Funding Systems and their Impact on Research and Teaching: A General Framework

This paper addresses the following question: how does a higher education funding system influence the trade-off that universities make between research and teaching? We do so by constructing a general model that allows universities to choose actively the quality of their teaching and research when faced with different funding systems. In particular, we derive the feasible sets that face universities under such systems and show how, as the parameters of the system are varied, the nature of the university system itself changes. The “culture” of the university system thus becomes endogenous. This makes the model useful for the analysis of reforms in funding and also for international comparisons.

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File URL: http://www.lboro.ac.uk/departments/ec/Reasearchpapers/2005/UniversityFundingSystems.pdf
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Paper provided by Department of Economics, Loughborough University in its series Discussion Paper Series with number 2005_2.

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Date of creation: Apr 2005
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Handle: RePEc:lbo:lbowps:2005_2
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Web page: http://www.lboro.ac.uk/departments/sbe/research/economics/index.html

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  1. Chapman, B., 1996. "Conceptual Issues and the Australian Experience with Income Contingent Charges for Higher Education," CEPR Discussion Papers 350, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  2. Robert J. Gary-Bobo & Alain Trannoy, 2004. "Efficient Tuition Fees, Examinations, and Subsidies (new title: Efficient tuition fees and subsidies)," CESifo Working Paper Series 1189, CESifo Group Munich.
  3. Garcia-Penalosa, Cecilia & Walde, Klaus, 2000. "Efficiency and Equity Effects of Subsidies to Higher Education," Oxford Economic Papers, Oxford University Press, vol. 52(4), pages 702-22, October.
  4. Charles T. Clotfelter, 1999. "The Familiar but Curious Economics of Higher Education: Introduction to a Symposium," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 3-12, Winter.
  5. Rey, Elena Del, 2001. "Teaching versus Research: A Model of State University Competition," Journal of Urban Economics, Elsevier, vol. 49(2), pages 356-373, March.
  6. Kemnitz, Alexander, 2003. "Funding, Competition and Quality in Higher Education," Discussion Papers 610, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
  7. Beath, John & Owen, Robert F. & Poyago-Theotoky, Joanna & Ulph, David, 2003. "Optimal incentives for income-generation in universities: the rule of thumb for the Compton tax," International Journal of Industrial Organization, Elsevier, vol. 21(9), pages 1301-1322, November.
  8. David Greenaway & Michelle Haynes, 2003. "Funding Higher Education in The UK: The Role of Fees and Loans," Economic Journal, Royal Economic Society, vol. 113(485), pages F150-F166, February.
  9. De Fraja, Gianni & Iossa, Elisabetta, 2002. "Competition among Universities and the Emergence of the Elite Institution," Bulletin of Economic Research, Wiley Blackwell, vol. 54(3), pages 275-93, July.
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