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Cost Efficiency and Privatization at Public Universities in the United States

Mon, April 8, 12:20 to 1:50pm, Sheraton Centre Toronto Hotel, Floor: Second Floor, Simcoe

Abstract

This study examines cost efficiency and privatization among public universities in the United States. This research covers 163 public universities across 11 years and employs several analytical techniques (spatial autoregressive random effects, stochastic frontier analysis, and maximum likelihood regression models) to examine how short run and long run cost (in)efficiency are related to privatization. The findings from this inquiry indicate that increased reliance on revenue from auxiliary enterprises contributes to short run cost efficiency but leads to long-run cost inefficiency. More reliance on private grant and contract revenue actually increases short and long run cost inefficiency, while increased dependency on tuition revenue does not appear to have an impact on long run cost efficiency.

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