An analysis of costs in institutions of higher education in England

Cost functions are estimated, using random effects and stochastic frontier methods, for English higher education institutions. The article advances on existing literature by employing finer disaggregation by subject, institution type and location, and by introducing consideration of quality effects. Estimates are provided of average incremental costs attached to each output type, and of returns to scale and scope. Implications for the policy of expansion of higher education are discussed.

Asymmetrical switch costs in children

Switching between tasks produces decreases in performance as compared to repeating the same task. Asymmetrical switch costs occur when switching between two tasks of unequal difficulty. This asymmetry occurs because the cost is greater when switching to the less difficult task than when switching to the more difficult task. Various theories about the origins of these asymmetrical switch costs have emerged from numerous and detailed experiments with adults. There is no documented evidence of asymmetrical switch costs in children. We conducted a series of studies that examined age-related changes in asymmetrical switch costs, within the same paradigm. Similarities in the patterns of asymmetrical switch costs between children and adults suggested that theoretical explanations of the cognitive mechanisms driving asymmetrical switch costs in adults could be applied to children. Age-related differences indicate that these theoretical explanations need to incorporate the relative contributions and interactions of developmental processes and task mastery. © 2006 Elsevier Inc. All rights reserved.

Raising rivals' fixed costs

This paper analyses the strategic use of fixed costs to deter entry or monopolize a market in a standard Cournot framework. First of all a general case shows how the presence of fixed costs can affect the possible equilibria to the Cournot game. It is shown that the presence of a firm with a first-mover advantage can have important implications if fixed costs are raised. In addition the forward induction process becomes important in determining plausible equilibria. The use of firstly regulation and secondly ‘nuisance’ law-suits are considered as strategies to increase fixed costs.

Analysis of transport costs for energy crops for use in biomass pyrolysis plant networks

Fast pyrolysis of biomass produces a liquid bio-oil that can be used for electricity generation. Bio-oil can be stored and transported so it is possible to decouple the pyrolysis process from the generation process. This allows each process to be separately optimised. It is necessary to have an understanding of the transport costs involved in order to carry out techno-economic assessments of combinations of remote pyrolysis plants and generation plants. Published fixed and variable costs for freight haulage have been used to calculate the transport cost for trucks running between field stores and a pyrolysis plant. It was found that the key parameter for estimating these costs was the number of round trips a day a truck could make rather than the distance covered. This zone costing approach was used to estimate the transport costs for a range of pyrolysis plants size for willow woodchips and baled miscanthus. The possibility of saving transport costs by producing bio-oil near to the field stores and transporting the bio-oil to a central plant was investigated and it was found that this would only be cost effective for large generation plants.

Impact of online channel use on customer revenues and costs to serve:considering product portfolios and self-selection

Developing a strategy for online channels requires knowledge of the effects of customers' online use on their revenue and cost to serve, which ultimately influence customer profitability. The authors theoretically discuss and empirically examine these effects. An empirical study of retail banking customers reveals that online use improves customer profitability by increasing customer revenue and decreasing cost to serve. Moreover, the revenue effects of online use are substantially larger than the cost-to-serve effects, although the effects of online use on customer revenue and cost to serve vary by product portfolio. Self-selection effects also emerge and can be even greater than online use effects. Ignoring self-selection effects thus can lead to poor managerial decision-making.

Costs and efficiency of higher education institutions in England:a DEA analysis

As student numbers in higher education in the UK have expanded during recent years, it has become increasingly important to understand its cost structure. This study applies Data Envelopment Analysis (DEA) to higher education institutions in England to assess their cost structure, efficiency and productivity. The paper complements an earlier study that used parametric methods to analyse the same panel data. Interestingly, DEA provides estimates of subject-specific unit costs that are in the same ballpark as those provided by the parametric methods. The paper then extends the previous analysis and finds that further student number increases of the order of 20–27% are feasible through exploiting operating and scale efficiency gains and also adjusting student mix. Finally the paper uses a Malmquist index approach to assess productivity change in the UK higher education. The results reveal that for a majority of institutions productivity has actually decreased during the study period.

Estimating the scope for savings in referrals and drug prescription costs in the general Practice units of a UK primary care trust

This paper explores the potential for cost savings in the general Practice units of a Primary Care Trust (PCT) in the UK. We have used Data Envelopment Analysis (DEA) to identify benchmark Practices, which offer the lowest aggregate referral and drugs costs controlling for the number, age, gender, and deprivation level of the patients registered with each Practice. For the remaining, non-benchmark Practices, estimates of the potential for savings on referral and drug costs were obtained. Such savings could be delivered through a combination of the following actions: (i) reducing the levels of referrals and prescriptions without affecting their mix (£15.74 m savings were identified, representing 6.4% of total expenditure); (ii) switching between inpatient and outpatient referrals and/or drug treatment to exploit differences in their unit costs (£10.61 m savings were identified, representing 4.3% of total expenditure); (iii) seeking a different profile of referral and drug unit costs (£11.81 m savings were identified, representing 4.8% of total expenditure). © 2012 Elsevier B.V. All rights reserved.

New insights in the moderating effect of switching costs on the satisfaction-repurchase behavior link

Existing studies on the role of switching costs (SC) as moderator of the relationship between satisfaction and repurchase behavior are inconclusive. We attempt to explain these inconclusive findings by synthesizing an amplifying and a lock-in effect, and hypothesize a nonlinear moderating effect. In Study 1 (a main study and three replications), we find strong evidence for an inverted u-shaped moderating effect of overall SC. Our results suggest that satisfaction is a particularly important predictor of repurchase behavior in situations characterized by medium-levels of SC. Based on Prospect Theory, Study 2 (a main study and one replication) reveals that this inverted u-shaped moderating effect of SC is stronger for positive (relational and financial) SC than for negative (procedural) SC. We conclude with recommendations for satisfaction management of different customer segments, and describe possibilities to influence customer switching costs in various industries. © 2014 New York University.

The impact of service characteristics on the switching costs-customer loyalty link

This research investigates the interrelationship between service characteristics and switching costs and makes two contributions to the service retailing literature: (1) As a means of better understanding the effectiveness of switching costs, the study suggests a two-dimensional typology of switching costs, including internal and external switching costs and (2) it reveals that the effect of these switching costs on customer loyalty is contingent upon four service characteristics (the IHIP characteristics of service). We carried out a meta-analytic review of the literature on the switching costs-customer loyalty link and created a hierarchical linear model using a sample of 1,694 customers from 51 service industries. Results reveal that external switching costs have a stronger average effect on customer loyalty than do internal switching costs. Moreover, we find that IHIP characteristics moderate the links between switching costs and customer loyalty. Thus, the link between external switching costs and customer loyalty is weaker in industries higher in the four service characteristics (as compared to industries lower in these characteristics), while the opposite moderating effect of service characteristics for the internal switching costs-loyalty link is noted. © 2014 New York University.

Securing business-to-business relationships:the impact of switching costs

While the relationship marketing literature acknowledges the importance of switching costs for increasing customer retention, little is known about its relevance in industrial markets. In particular, it is unclear whether switching costs, and associated dimensions, impact on behavioral outcomes of buyer–seller relationships in business-to-business (B2B) markets. In order to contribute to theory development in this important area, our research first explores the dimensions of switching costs for the B2B domain and also tests the relative impact of these dimensions on business customers' actual purchase behavior. Results suggest that switching costs in B2B settings are a multi-faceted construct, including (i) procedural, (ii) financial, and (iii) relational switching costs. Moreover, we find relational switching costs to be most important for securing B2B buyer–seller relationships since they impact a customer's (a) share-of-wallet, (b) cross-buying behavior, and (c) actual switching behavior. While procedural switching costs only influence share-of-wallet, financial switching costs solely impact customer's cross-buying behavior. These findings contribute to a better understanding on how to secure B2B buyer–seller relationships.

Raising rivals’ fixed costs

This article demonstrates that raising fixed costs can serve as a credible mechanism for a well placed firm to exclude its rivals. We identify a number of credible avenues, such as increased regulation, vexatious litigation and increased prices for essential inputs, through which such a firm can raise fixed costs. We show that for a wide range of oligopoly models this may be a profitable strategy, even if the firm’s own fixed costs are affected as much (or even more) than its rivals and even if it is less efficient. The resulting reduction in the number of firms in the market is detrimental to consumer welfare and hence worthy of scrutiny by competition and regulatory authorities.

Accounting and the 'insoluble' problem of health care costs

Health service accounting reforms are frequently promoted, explained or justified with reference to ageing populations, expensive medical technologies and their purported implications for the cost of health care. Drawing on Foucault’s genealogical method, we examine the emergence of concerns regarding health expenditure in the wake of the creation of the British National Health Service in 1948, and their relationship with health service accounting practices. We argue that concerns regarding the cost of health care are historically contingent rather than inescapable consequences of demographic and technological change, and that health service accounting practices are both constitutive and reflective of such concerns. We conclude by relating our analysis to current attempts to control costs and increase efficiency in the health services.

Costs and benefits of orthographic inconsistency in reading:evidence from a cross-linguistic comparison

We compared reading acquisition in English and Italian children up to late primary school analyzing RTs and errors as a function of various psycholinguistic variables and changes due to experience. Our results show that reading becomes progressively more reliant on larger processing units with age, but that this is modulated by consistency of the language. In English, an inconsistent orthography, reliance on larger units occurs earlier on and it is demonstrated by faster RTs, a stronger effect of lexical variables and lack of length effect (by fifth grade). However, not all English children are able to master this mode of processing yielding larger inter-individual variability. In Italian, a consistent orthography, reliance on larger units occurs later and it is less pronounced. This is demonstrated by larger length effects which remain significant even in older children and by larger effects of a global factor (related to speed of orthographic decoding) explaining changes of performance across ages. Our results show the importance of considering not only overall performance, but inter-individual variability and variability between conditions when interpreting cross-linguistic differences.