Hotelling competition and teaching efficiency of Italian university faculties. A semi-parametric analysis.

In this paper we explore the effect of competition (à la Hotelling) on teaching efficiency of the Italian university system at faculty-level, over the period 2004 to 2008. The analysis is performed in two stages. First, we use Data Envelopment Analysis (DEA) to calculate an index of teaching efficiency. Second, a parametric approach is used to evaluate the determinants of teaching efficiency, focusing on the impact of competition. Our results are in favour of competition: when faculties operate in a more competitive environment, they are induced to carry out teaching activity in a more efficient way.