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University Cost Structure In Taiwan

Author

Listed:
  • TSU‐TAN FU
  • CLIFF J. HUANG
  • FLORA F. TIEN

Abstract

In this paper we demonstrate that the measures of scale and scope economies may be elusive if failing to consider quality variation among universities and endogeneity of congestion in students’ learning and living facility utilization. Empirical results show that the private and highly congested universities have consistently underestimated the cost of congestion, which results in an upward bias in estimating the economies of scale and scope. Taking into account the quality of outputs in enrollments and the congestion factor, we find that the private and the more congested universities have much less scale and scope economies than the public and the less congested institutions. (JEL I21, H52, 9120)

Suggested Citation

  • Tsu‐Tan Fu & Cliff J. Huang & Flora F. Tien, 2008. "University Cost Structure In Taiwan," Contemporary Economic Policy, Western Economic Association International, vol. 26(4), pages 651-662, October.
    • Handle: RePEc:bla:coecpo:v:26:y:2008:i:4:p:651-662
    DOI: 10.1111/j.1465-7287.2008.00104.x
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    References listed on IDEAS

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    1. Hughes, Joseph P. & Mester, Loretta J. & Moon, Choon-Geol, 2001. "Are scale economies in banking elusive or illusive?: Evidence obtained by incorporating capital structure and risk-taking into models of bank production," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2169-2208, December.
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    3. Keiji Hashimoto & Elchanan Cohn, 1997. "Economies of Scale and Scope in Japanese Private Universities," Education Economics, Taylor & Francis Journals, vol. 5(2), pages 107-115.
    4. Malcolm Getz & John J. Siegfried, 2004. "The Sensitivity of Capital Use to Price in Higher Education," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 24(4), pages 379-391, June.
    5. Braeutigam, Ronald R. & Daughety, Andrew F., 1983. "On the estimation of returns to scale using variable cost functions," Economics Letters, Elsevier, vol. 11(1-2), pages 25-31.
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    Citations

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    Cited by:

    1. Tirivayi, J.N. & Maasen van den Brink, H. & Groot, W.N.J., 2014. "Size and economies of scale in higher education and the implications for mergers," MERIT Working Papers 2014-066, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Marvin A. Titus & Adriana Vamosiu & Kevin R. McClure, 2017. "Are Public Master’s Institutions Cost Efficient? A Stochastic Frontier and Spatial Analysis," Research in Higher Education, Springer;Association for Institutional Research, vol. 58(5), pages 469-496, August.
    3. Jiro Nemoto & Noriko Furumatsu, 2014. "Scale and scope economies of Japanese private universities revisited with an input distance function approach," Journal of Productivity Analysis, Springer, vol. 41(2), pages 213-226, April.
    4. 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.
    5. Gralka, Sabine, 2018. "Stochastic frontier analysis in higher education: A systematic review," CEPIE Working Papers 05/18, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    6. Fu, Tsu-Tan & Sung, An-De & See, Kok Fong & Chou, Kuo-Wei, 2019. "Do optimal scale and efficiency matter in Taiwan's higher education reform? A stochastic cost frontier approach," Socio-Economic Planning Sciences, Elsevier, vol. 67(C), pages 111-119.
    7. Orosco Gavilán, Juan Carlos, 2023. "Measuring efficiency of Peruvian universities: a stochastic frontier analysis," DES - Working Papers. Statistics and Econometrics. WS 36250, Universidad Carlos III de Madrid. Departamento de Estadística.
    8. Fu, Tsu-Tan & See, Kok Fong, 2022. "An integrated analysis of quality and productivity growth in China’s and Taiwan’s higher education institutions," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 234-249.

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    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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