Competition and Market Incentives in Higher Education

This paper analyses forms of competition in the provision of tertiary education services that have arisen or could arise either because of liberalisations of the sector or because of reforms that introduce competition between public or private Higher Education Institutions (HEIs). The analysis suggests that there are important incentives that could be triggered by market forces and competition in the provision of tertiary education services. However there is a very important role for the state to play to insure that competitive forces deliver actual benefits to social welfare and do not distort the HEIs incentives to the detriment of basic research or of disciplines whose output cannot easily be appropriated in a market context