EFFICIENCY IN THE PROVISION OF UNIVERSITY TEACHING AND RESEARCH - AN EMPIRICAL-ANALYSIS OF UK UNIVERSITIES

A flexible three-output, two-input cost function model is used to exam ine the cost efficiency of UK universities as producers of teaching an d research 'outputs'. Unlike previous studies, a comprehensive peer re view of research quality is incorporated. Overall, product-specific an d input-specific economies of scale, global and product-specific econo mies of scope, marginal costs and cost complementarities are estimated . Overall and product-specific scale results indicate considerable inc reasing returns, while the scope results generally suggest neither eco nomies nor diseconomies. Sensitivity analysis is used to simulate the impact of current government policy, regarding the expansion of underg raduate teaching output, on these results.