Revisiting Economies of Scale and Scope in Higher Education

  • Robert K. Toutkoushian
  • Jason C. Lee
Part of the Higher Education: Handbook of Theory and Research book series (HATR, volume 33)


In this chapter, we examine the range of methods used by researchers to assess economies of scale and scope in higher education. We begin by providing some context for why researchers and policy makers are interested in the relationship between an institution’s size and scope and their cost per unit of output. We then provide an explanation of the alternative methods that have been used in studies, the advantages and disadvantages of each method, and how they can be applied to different types of institutions. Next, we conduct a thorough review of the empirical literature on higher education. Finally, we use more current data from the 2012–2013 academic year on institutional finances to reexamine whether there are economies of scale and/or scope in higher education. Our findings show that across methods and sectors there is clear evidence of economies of scale, and that the results for economies of scope are more mixed due to methodological challenges with the models.


Economics Economies of scale Economies of scope Finance Efficiency Regression analysis Production Cost function Optimization Bowen Baumol Average cost Marginal cost Average incremental cost Outputs Inputs 



An earlier version of this paper was presented at the meeting of the Association for Education Finance and Policy (AEFP), Denver, CO, March 17–19, 2016 and the meeting of the Association for the Study of Higher Education (ASHE), Houston, TX, November 9–11, 2017. We would like to thank Keith Allen for his help at the early stages of this project, and Steve DesJardins, Steve Porter, and Sarah Pingel for their helpful comments on earlier drafts of this paper.


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© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Institute of Higher EducationUniversity of GeorgiaAthensUSA

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