Allowing the Market to Rule: The Case of the United States

Abstract

There are increasing calls in the UK and other countries for deregulating universities so that they can better compete in the global market for higher education. Frequent allusions are made to the superiority of the US marketoriented system. But is market competition for first degrees in the US efficient for the larger society? Do the constantly increasing social expenditures for higher education in the US benefit the public interest or do they advantage certain students and faculty members? Two recent economic studies provide greater insight into the impacts of market competition on US higher education. The results of these studies are discussed and their possible implications for higher education policy making in other countries are explored.

Students as customers: a paradigm shift in higher education

“…Regardless of the educational quality per se, attending a prestigious university does mark a difference in future opportunities (Kingston and Smart, 1990;Clarke, 2002;Dill, 2003;Montgomery and Canaan, 2004). In this respect, Binsardi and Ekwulugo (2003) pointed out that students do not 'buy' qualifications as such, but rather the benefits that a title can provide them in terms of employment, status, and lifestyle, among other things.…”

Public Perception of the Quality of Academic Education Program

“…Similarly, Bindsardi and Ekwulugo (2003) found that the students' choice of institutions was affected by education standard of that institution and its credibility and employment opportunities. The rank and accreditation as reputation is also used by the most attractive segments of students mainly from high income families (Dill, 2003). Ho and Hung (2008) found that the five most important factors in students' school selection were employability, curriculum, academic reputation, faculty, and research environment.…”

Revenue generation strategies in Sub-Saharan African universities

“…Studies show that an increase in GDP per capita influences the demand for university education (OECD, 1993. Economic trends also include the unemployment levels of university graduates, opportunities for employment for those without university level education, the economic structure, and even faculty and staff labour markets that affect a given university's responses to external demands and expectations (Dill, 2003). For example, industrialism and other forms of modern economic growth require job skills of an increasing range and complexity (Ramirez, Riddle, 1991).…”

“…Many authors show that the nature of competition and the number of competitors in the task environment can influence revenue generation in public universities (Dill, 2003). The intensity of rivalry for the higher education market can be influenced by several factors.…”

“…These include: (i) the number or concentration of competitors; (ii) their similarities or differences in programmes; (iii) a slow growth of the higher education market in terms of student numbers; and (iv) the costs of switching from one university to another (Duczmal, 2006;Mansfield, 1991;Begg, Dornbusch, & Fischer, 1991;Dill, 2003;Jongbloed, 2003). Some of the key competitors for a public university consist of private and public providers of post-secondary education, R&D institutes in government organisations and industrial firms, private companies, etc., which are part of a common industry providing academic degrees, research and services (Dill, 2003;Clark, 1998;Massy,2003;Enders, Jongbloed & Salerno, 2008;Salmi, 2007). These factors can either enable or erect barriers to revenue generation in public universities.…”