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Edited by Geraint Johnes and Jill Johnes
Chapter 15: Multi-product Cost Functions for Universities: Economies of Scale and Scope
Elchanan Cohn and Samuel T. Cooper Introduction The structure of knowledge began to change radically in the late nineteenth and early twentieth centuries. Although these changes did not originate in universities and colleges, they were to aﬀect them greatly. . . . In higher education, a diﬀerent set of wide-ranging changes transformed what was taught, who taught it, and how it was taught. They created a new relationship between research and teaching and aﬀected both the scale and scope of higher education. . . . Most of these changes also served to increase economies to scale and to raise the number of faculty members and students that were required to remain viable. . . . In 1897, the median private institution [in the USA] had only 130 students; the median public-sector institution, at 240 students, was not much larger. . . . As we approached the turn of the twenty-ﬁrst century, the median number of students per institution was about 1600 in the private sector and almost 8200 in the public sector. (Goldin and Katz, 2001, pp. 8–9) Universities and colleges, wherever they are located, must be considered multi-product enterprises. As Goldin and Katz (2001) point out, ‘the typical American university as it emerged at the beginning of the twentieth century was a veritable department store of higher education services’ (p. 9). Among the outputs produced in the typical institution of higher education (IHE) are knowledge creation (research) and knowledge dissemination (teaching). Public service is another output. The ‘public service function in American higher education is . . . an...
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