Examining Competition in Ontario’s Higher Education Market

Abstract

Similar to many other institutions in a market economy, colleges and universities operate in their own "marketplace." Their industry (higher education) utilizes tools of the market to compete, in order to succeed and progress. Today, changes in the world's economic and political systems are affecting higher education by "making higher education a tradable commodity [and] opening national systems of post-secondary education to international competitors" (Bruneau & Schuetze, 2004, p. 4). Indeed, these changes have ignited the competitive behaviour of academic institutions and their transformation towards the market, which has enhanced their ability to use market tools. The increasing reliance on the market has become a solution for many publicly funded universities that compensate for the drop in public funding. This market-oriented behaviour has led many academic institutions to adopt corporate and market strategies, which has in turn fuelled competition among traditional public academic institutions.This study investigated the market of higher education in Ontario and analyzed competition and its effect on enrolment, applications for admission, and persistence ratio. The study examined enrolment levels and the number of applicants as the expected outcome of competition rather than an educational outcome. This study has dealt with competition as a management dimension and has analyzed the administrative side of universities rather than the academic side of knowledge dissemination. The study examined competition within the local market of publicly funded universities in the province of Ontario. Examining Ontario's universities is important due to the large proportion of Canadian institutions represented by Ontario in the Canadian higher education market. Also, a better understanding of the effect of competition will shed light on one of the most dynamic industries in Canada."there are at least some restrictions (mainly in the form of capital needed) upon entry into the industry and some losses connected with departure from it" (p. 248). The last feature of this type of market is related to information which is also available for all stakeholders. Therefore, one can assume that the above characteristics of monopolistic competition market structure, excluding profit maximization, may represent Ontario's higher education market for many reasons. These reasons are explained in the next section and are linked to the higher education market in Ontario. The Higher Education Market Structure in OntarioIn Ontario, there are 20 publicly funded universities, 24 publicly funded colleges, and 400 private career colleges (Ministry of Training, Colleges and Universities, n.d.a). This large number of academic institutions is consistent with the first criterion of a monopolistic competition market, which is the existence of a large number of providers of products and services. In this market model, providers are located close to each other (Salvatore, 2004).Arguably, this is the case with most higher education institutions in ...

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“…Thus, to attract students, many universities offer campus tours, infrastructure investments, merit-based discounts, sports investments and the recruitment of qualified faculty and staff to compete and generate other sources of revenue (Mause, 2009). Because keeping these variables competitive is expensive (Farhan, 2017), universities must establish tuition fees to balance the institution's revenue needs with the public perception of higher costs and political pressures (Doyle, 2012). Price must be fair since the service provider's environment may impact price perception (Graciola et al, 2018) and, consequently, price fairness.…”

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“…In the most recent financial report of Ontario Universities, the Council of Ontario Finance Officers (2021) pointed out that in the total revenue from all sources, the revenue from tuition and miscellaneous fees paid by students exceeded the revenue from provincial grants and contracts. The two sources of revenue are both contingent on enrolment numbers, and since the university's operating budget is taken from the revenue, it is imperative for universities to fill/increase their enrolment spots to generate sufficient revenue to finance their operations (Farhan, 2017;Council of Ontario Finance Officers, 2020). To support student recruitment, activities such as open house events, university fairs, and daily campus tours became part of the HEI marketing strategy (Magolda, 2000;Pizzaro Milian, 2017).…”

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