Will Market Competition Assure Academic Quality? An Analysis of the UK and US Experience

A major change that has accompanied the world-wide “massification” of higher education is the new-found openness of policymakers to the use of competitive markets to steer the university sector. In many countries efforts to improve the quality of publicly provided higher education, both in teaching and in research, are leading to experiments with market-based policy instruments (Teixeira, et al, 2004). The perceived quality of universities in the competitive US system – what Trow (2000) has termed the “American advantage” -has inspired much of this interest in market forces. While a number of these market experiments may also be motivated by a desire to restrict public expenditures in rapidly expanding systems of higher education, many policymakers and academics believe that there is a relationship between the degree of market competition and academic quality (Dill, 2005). This presumed relationship between academic quality and market competition clearly influenced US federal policy decisions on the financing of higher education in the years following World War II. In 1972 the US Congress explicitly rejected proposals for federal grants to institutions in favor of federal student assistance on the grounds that student loans and grants would promote competition for academic quality within the US system. In current debates about

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