University Cost Structure in Taiwan

In this paper we demonstrate that the measures of scale and scope economies may be elusive if failing to consider quality variation among universities and endogeneity of congestion in students learning and living facility utilization. Empirical results show that the private and highly congested universities have consistently underestimated the cost of congestion, which results in an upward bias in estimating the economies of scale and scope. Taking into account the quality of outputs in enrollments and the congestion factor, we find that the private and the more congested universities have much less scale and scope economies than the public and the less congested institutions