Economies of scale and scope at public master's institutions: Evidence accounting for spatial interdependency

Persistent Cost Efficiency at Public Community Colleges in the US: A Stochastic Frontier Analysis

“…The cost function takes a quadratic form, which permits fixed cost differences among outputs, is flexible in nature, and allows for zero values (Cohn et al 1989;Koshal & Koshal, 1999;Lenton, 2008;Johnes & Johnes, 2009;Sav, 2011;Titus et al 2017;Vamosiu et al 2018). Allowing for zero values of outputs for some institutions and points in time is relevant since not all institutions produce all outputs (associate degrees, short, medium and long-term certificates) every year.…”

“…First, the few previous studies on costs at community colleges used either crosssectional data (Toutkoushian & Lee, 2018) or panel data for a short period of time (Sav, 2012). Second, following Titus et al (2017) and Vamosiu et al (2018), we account for geographic interdependence of operating costs and efficiency indices. By not accounting for the possibility of spatial correlation via a spatially weighted cost variable, previous studies implicitly assumed institutions across state borders or those located in rural versus metropolitan settings face similar operating costs.…”

Cost Efficiency and Privatization at Public Universities in the United States

“…Specifically, if changes in enrollment are considered, the marginal cost measures the additional cost of the desired change in enrollment to the university. These four measures of cost allow researchers to calculate the presence of economies of scale and scope (Cohn, Rhine, and Santos 1989;Johnes and Johnes 2009;Koshal and Koshal 1999;Lenton 2008;Mamun 2012;Sav 2004Sav , 2011Vamosiu, McClure, and Titus 2018), which inform administrators on whether enrollment and research expenditures can be increased without adjusting resources and whether engaging in both teaching and research is optimal from an efficiency standpoint.…”

“…The CES functional form violates the monopoly constraint (i.e., one higher education institution is producing all outputs), the single-product firm constraint (i.e., each higher education institution offers only one type of output) or both, unless complex parameter restrictions are enforced (Johnes 1997). The quadratic form is flexible in nature, permits fixed cost differences among outputs, and allows for zero values, with the latter making it widely used in higher education economies of scale and scope studies (Cohn, Rhine, and Santos 1989;Koshal and Koshal 1999;Lenton 2008;Johnes and Johnes 2009;Mamun 2012;Sav 2004Sav , 2011Vamosiu, McClure, and Titus 2018). The translog functional form is known for its flexibility (Christensen, Jorgenson, and Lau 1973) and for its ability to compute elasticities of outputs evaluated at the means of the data.…”

“…With the exception of Sav (2011Sav ( , 2017, prior studies focusing on costs at public universities analyzed cross-sectional data (Cohn, Rhine, and Santos 1989;de Groot, McMahon, and Volkwein 1991;Dundar and Lewis 1995;Koshal and Koshal 1999;Laband and Lentz 2003;Sav 2004). Second, following Titus, Vamosiu, and McClure (2017) and Vamosiu, McClure, and Titus (2018), we account for geographic interdependence with respect to cost and inefficiency indices at public research universities. By not accounting for the possibility of spatial correlation, previous studies implicitly assumed universities across state borders or those located in rural versus metropolitan settings face similar costs.…”