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Many studies exist in the literature of scale and scope economies in institutions of higher education employing multi-product cost functions of quadratic, constant elasticity substitution (CES), or hybrid translog form. A single product cost function is normally considered inadequate and yield distorted results. Both quadratic and single product cost functions have been applied to university data from China’s Ministry of Education (MOE). This study compares those two methods and their statistical results and finds that ray economies of scale from these two cost functions are quite similar though the single product cost function which can not be used to calculate product-specific economies of scale or economies of scope.

Is a Single Product Cost Function Appropriate for Institutions of Higher Education? Empirical Evidence From China’s Research Universities