Panel Data Estimates of Public Higher Education Scale and Scope Economies‪.‬

Introduction This paper uses panel data for U.S. public colleges and universities to estimate multi-product cost functions and the economies of scale and scope associated with teaching and research. The panel spans the academic years 2000-2001, 2003-2004, and 2006-2007. The proposed contributions are several. First, previous studies produce single year, cross-section estimates that are potentially biased due to unobservable individual and/or time effects. Presently, fixed effects models are used to test for both effects. Second, the present analysis extends to the 2006-2007 academic year whereas the mainstream previous studies do not produce estimates beyond 1995-1996. Finally, in contrast to the available aggregated estimates, cost, scale, and scope are examined for four Carnegie classification levels, including doctoral, master, bachelor, and two-year associate degree granting colleges and universities. Given the continuing state level budgetary problems driving public higher education funding changes and restructuring movements, the focus of inquiry is on public colleges and universities. With that, the next section presents a brief literature background, followed by a cost methodology section and then an explanation of the data, empirical results, and concluding remarks.