Differences in Cost Structure and the Evaluation of Efficiency: The Case of German Universities

18 Pages Posted: 25 May 2007

See all articles by Geraint Johnes

Geraint Johnes

Lancaster University - Lancaster University Management School; Lancaster University

Astrid Schwarzenberger

Hochschul-Informations-System

Date Written: May 2007

Abstract

A multiproduct cost function is estimated for German higher education institutions using a panel of data from recent years. The use of panel data allows a random parameter stochastic frontier model to be estimated, and this delivers new insights on the extent to which differences in costs between institutions producing similar vectors of outputs may be due to different cost structures, on the one hand, and efficiency, on the other. The approach used here therefore resembles in some respects the non-parametric methods of efficiency evaluation, since different loss functions attach to different universities. We report also on measures of average incremental cost of provision and on returns to scale and scope.

Keywords: stochastic frontier, random parameter models, costs, higher education

JEL Classification: C14, C23, C51, D20, I20

Suggested Citation

Johnes, Geraint and Schwarzenberger, Astrid, Differences in Cost Structure and the Evaluation of Efficiency: The Case of German Universities (May 2007). Available at SSRN: https://ssrn.com/abstract=988922 or http://dx.doi.org/10.2139/ssrn.988922

Geraint Johnes (Contact Author)

Lancaster University - Lancaster University Management School ( email )

Bailrigg
Lancaster, LA1 4YX
United Kingdom
+44 1524 594215 (Phone)
+44 1524 594244 (Fax)

Lancaster University ( email )

Lancaster LA1 4YX
United Kingdom

Astrid Schwarzenberger

Hochschul-Informations-System ( email )

Goseriede 9
Hannover, 30159
Germany

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