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How Does the Governance of Academic Faculties Affect Competition Among Them?

Author

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  • Prüfer, J.

    (Tilburg University, Center For Economic Research)

  • Walz, U.

Abstract

We analyze competition among academic faculties for new researchers. The value to individual members through social interaction within the faculty depends on the average status of their fellow members. When competing for new members, existing members trade off the effect of entry on average status of the faculty against the reduction in teaching load that can be bought if no entry takes place and the entrant's wage is saved. We show that the best candidates join the best faculties but that they receive lower wages than some lower-ranking candidates. Endogenizing the governance structure of the faculties, we show that the aggregate surplus of a faculty is maximized if a decision-making rule is implemented that makes the average faculty member pivotal. Our main policy implication is that consensus-based faculties, such as many in Europe, could improve the well-being of their members if they liberalized their internal decision making processes.

Suggested Citation

  • Prüfer, J. & Walz, U., 2009. "How Does the Governance of Academic Faculties Affect Competition Among Them?," Discussion Paper 2009-49, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:f0e504a7-78a7-4315-8517-e685a42a783f
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    File URL: https://pure.uvt.nl/portal/files/1099967/2009-49.pdf
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    References listed on IDEAS

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    1. Barbera, S. & Maschler, M. & Shalev, J., 2001. "Voting for Voters: A Model of Electoral Evolution," Games and Economic Behavior, Elsevier, vol. 37(1), pages 40-78, October.
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    3. Sandler, Todd & Tschirhart, John T, 1980. "The Economic Theory of Clubs: An Evaluative Survey," Journal of Economic Literature, American Economic Association, pages 1481-1521.
    4. Hansmann, Henry, 1986. "A Theory of Status Organizations," Journal of Law, Economics, and Organization, Oxford University Press, vol. 2(1), pages 119-130, Spring.
    5. Scott E. Masten, 2006. "Authority and Commitment: Why Universities, Like Legislatures, Are Not Organized as Firms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(3), pages 649-684, September.
    6. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
    7. Robert W. Helsley & William C. Strange, 1991. "Exclusion and the Theory of Clubs," Canadian Journal of Economics, Canadian Economics Association, vol. 24(4), pages 889-899, November.
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    More about this item

    Keywords

    Academic faculties; university governance; organizational design; status organizations;

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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