Scope economies in Australian distance education

Abstract

The purpose of this study is to investigate scale and scope economies in the Australian university sector and explore another possible form of instruction output, distance education, which could have more potential scale and scope economies. This study uses a balanced panel data including 37 Australian public universities over the period 2010-12. Bayesian random stochastic frontier model is used to account for inefficient production and heterogeneity across universities. This model comprises a normalised quadratic cost function with seven outputs and three input factors. Estimates of scale and scope economies will be calculated with the sample data and estimated parameters from the model.