A Cost Function for Higher Education in Australia

Melbourne Institute Working Paper No. 11/02

Date: July 2002


John Creedy
David Johnson
Ma. Rebecca Valenzuela


This study estimates a cost function for higher education in Australian universities using pooled series of cross-sectional data. The study enabled the quantification of the cost differences between levels of studies and subject areas. The cost function is useful in an number of ways. It can be used by universities to evaluate the effect of changes in course structure and size on university budgets. It may also be used by universities to help develop pricing policy for courses for fee paying courses. In this paper it was used to derive estimates of the overall cost of providing higher education to overseas students.

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