Economies of Scale and Scope in Australian Higher Education, 1998-2006

30 Pages Posted: 14 Dec 2008

Date Written: November 30, 2008

Abstract

This paper estimates economies of scale and scope for thirty-six Australian universities using a multiple-input, multiple-output cost function over the period 1998 to 2006. The three inputs included in the analysis are full-time equivalent academic and non-academic staff and physical capital. The five outputs are undergraduate, postgraduate and PhD completions, national competitive and industry grants, and publications. The findings indicate that ray economies of scale hold up to about 120 percent of current mean output though product-specific economies of scale hold only for undergraduate teaching. Global economies of scope prevail in the sector, increasing with the level of mean output, while product-specific economies of scope arise for all outputs except publications. A cost efficiency index constructed using the sector benchmark indicates that the universities of Ballarat, Southern Cross and Flinders have a high level of cost efficiency, while New South Wales, Royal Melbourne Institute of Technology and James Cook are cost inefficient.

Keywords: Economies of scale, economies of scope, substitutes and complements in production, cost efficiency

JEL Classification: C33, I23, L25

Suggested Citation

Worthington, Andrew C. and Higgs, Helen, Economies of Scale and Scope in Australian Higher Education, 1998-2006 (November 30, 2008). Available at SSRN: https://ssrn.com/abstract=1309384 or http://dx.doi.org/10.2139/ssrn.1309384

Andrew C. Worthington (Contact Author)

Griffith University ( email )

170 Kessels Road
Nathan, Queensland 4111
Australia
+61 (0)7 3735 4273 (Phone)
+61 (0)7 3735 3719 (Fax)

Helen Higgs

Griffith University ( email )

170 Kessels Road
Nathan, QLD 4111
Australia
61737357732 (Phone)
61737353719 (Fax)

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