Economies of Scale in Distance Learning (DL)

Abstract

As per conventional wisdom, the larger the size of the distance learning (DL) educational facility in terms of student enrollments, lower also would be the unit capital and unit operating costs. Looking at empirical evidence, the correlation between the two variables of enrollments and average total costs is unmistakable, even if not significant. In this chapter the nature and strength of such relationship is of more interest. This work discusses ramifications of scale-related economies for public policy, such as a mega or open university and so forth, for cost effectiveness of tax dollars, if any, spent on a DL unit. However, the scope of the chapter is limited to scale-related economies and it does not encompass the nitty-gritty of social cost benefit analysis. Subsequently, DL costs of a mega university are looked into to identify and quantify scale-related economies. The last part suggests what would make it possible to achieve minimum efficient scale (MES) size so that scale-related economies are achieved or diseconomies of scale are surmounted.