Universities as Firms

E. Han Kim and Min Zhu

in American Universities in a Global Market

Published by University of Chicago Press

Published in print June 2010 | ISBN: 9780226110448
Published online February 2013 | e-ISBN: 9780226110455 | DOI:
Universities as Firms

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Universities in the United States are the leading providers of higher education in the world and are also active in a wide range of international activities, from setting up cross-country research labs to offering degree programs in foreign countries. This chapter employs the standard economic analysis to study overseas degree programs offered by US universities, and addresses whether university motives for foreign direct investment are different from those of multinational corporations. It discusses how economic motives and non-pecuniary factors affect universities' decision to offer overseas programs, providing an overview of the costs and benefits affecting the supply for and demand of US university overseas programs. Universities behave much like multinational corporations when they make overseas investments and operate overseas programs. The strategies they adopt to maximize the present value of the revenue–cost difference depends on the university type. US universities seem to price their products strategically, like US multinational corporations, using their competitive edge in attempts to generate more resources for the benefit of their home institutions.

Keywords: universities; economic analysis; overseas program; multinational corporation; revenue–cost difference

Chapter.  15991 words. 

Subjects: International Economics

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