Measuring Teaching Effi ciency of the Italian University System : the Role of Market Structure . A two step DEA analysis at faculty level

In this paper we explore the role of competition in providing incentives to improve teaching effi ciency of the Italian university system 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 effi ciency; second, a parametric approach is used to evaluate the determinants of teaching effi ciency, focusing on the impact of competition. We contribute to the existing research in two ways. One way is to measure teaching effi ciency of the Italian university system at faculty level; this way we provide a more accurate measurement of teaching effi ciency by using the faculty-level of analysis. The other way is to explore the role of competition, captured by the market structure, in providing incentives to improve teaching effi ciency. 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 effi cient way. However, competition does not induce faculties to grant more easily the degree to merely increase the output.

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