Title : The University and the Prince: Public funds shaping university trajectories
Author(s) : Andrea Borsato, Valentina Erasmo and André Lorentz
Abstract : We develop an evolutionary model to analyse the role of policymaker’s preferences about the amount and the direction of funding in determining the trajectories of universities. We draw a parallel between the research and the teaching environments, and the Schumpeter Mark I and Schumpeter Mark II innovative patterns, respectively. We obtain that shifting the priority from pure to utilitarian knowledge, and vice-versa, makes production and employment dynamics follow an inverted-U shape. Likewise, the complementarity between teaching and research typical of Humboldt-like organisations allows the system to experience the best performance when preferences are neither too research- nor too teaching-oriented. Moreover, a generalised increase in funds is not effective if the distribution mechanisms are untouched and prioritise university reputation. Finally, a Baumol’s cost disease arises when the scientists wage rate is centralised at system level as in most European economies.
Key-words : university trajectories; government funding policy; third mission.
JEL Classification : I23 , L16 , O30.
