Size and economies of scale in higher education and the implications for mergers

This paper carries out a meta regression analysis to estimate the optimal size of higher education institutions (HEI) and identify its implications for strategies of mergers in higher education. This study finds an optimal institutional size of 24,954 students. We find potential opportunities for merging different HEIs relative to their mean sample size: public universities by nearly 190 per cent, private universities by 131 per cent, small colleges by around 952 per cent, and non-US HEIs by about 118 per cent. However, if we compare with actual sizes of top ranked universities we find that in some parts of the world top ranked universities seem to be below optimal size, while in others they appear above optimal size. We urge caution in the interpretation of the findings due to the limited data. We recommend further research and that policymakers around the world refer to their own cost structures to determine the optimal size for efficiency.

JEL Classification: I23, I21, I22

Keywords: Size, economies of scale, higher education, mergers, optimal size