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Economies of scale and scope of universities – towards bigger size and specialization?

Author

Listed:
  • Tommaso Agasisti

    (Politecnico di Milano, School of Management)

  • Alice Bertoletti

    (Politecnico di Milano, School of Management)

  • Giacomo Pignataro

    (Politecnico di Milano, School of Management and University of Catania)

Abstract

This paper provides an estimation of the specific cost structure of the Italian public universities, considering their complex function of producing teaching and research. The analysis employs a quadratic cost function and an innovative dataset for the year 2016. When modelling the cost structure, we explicitly take the potential inefficiency into account, using a Stochastic Frontier Analysis. Current levels of marginal and average costs suggest that economies of scale can be still exploited. Strong diseconomies of scope between teaching and research also exist. Policies dealing with mergers and specialization are justified from the cost-efficiency point of view.

Suggested Citation

  • Tommaso Agasisti & Alice Bertoletti & Giacomo Pignataro, 2021. "Economies of scale and scope of universities – towards bigger size and specialization?," Economics Bulletin, AccessEcon, vol. 41(2), pages 405-416.
    • Handle: RePEc:ebl:ecbull:eb-20-00710
    as

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    References listed on IDEAS

    as
    1. Tommaso Agasisti & Carlo Salerno, 2007. "Assessing the Cost Efficiency of Italian Universities," Education Economics, Taylor & Francis Journals, vol. 15(4), pages 455-471.
    2. Elchanan Cohn & Samuel T. Cooper, 2004. "Multi-product Cost Functions for Universities: Economies of Scale and Scope," Chapters, in: Geraint Johnes & Jill Johnes (ed.), International Handbook on the Economics of Education, chapter 15, Edward Elgar Publishing.
    3. 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.
    4. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    5. Tommaso Agasisti & Geraint Johnes, 2010. "Heterogeneity and the evaluation of efficiency: the case of Italian universities," Applied Economics, Taylor & Francis Journals, vol. 42(11), pages 1365-1375.
    6. Tommaso Agasisti, 2016. "Cost structure, productivity and efficiency of the Italian public higher education industry 2001--2011," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(1), pages 48-68, January.
    7. Dundar, Halil & Lewis, Darrell R., 1995. "Departmental productivity in American universities: Economies of scale and scope," Economics of Education Review, Elsevier, vol. 14(2), pages 119-144, June.
    8. Wolszczak-Derlacz, Joanna, 2017. "An evaluation and explanation of (in)efficiency in higher education institutions in Europe and the U.S. with the application of two-stage semi-parametric DEA," Research Policy, Elsevier, vol. 46(9), pages 1595-1605.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Universities; cost functions; economies of scale; economies of scope; stochastic frontier;
    All these keywords.

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • H8 - Public Economics - - Miscellaneous Issues

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