Who is complementing public funding of academic research? Different sources with different strategies

The issue of funding of universities is attracting large interest in recent years, due to changes in the public-private divide and to concern about the long term impact of an increasing role of private sources. This papers offers a new perspective on this important issue, by developing a novel methodology for empirical analysis and examining detailed data on the UK case. The paper contributes to the literature in at least three ways. First, it introduces a new estimation methodology, based on latest results in robust nonparametric efficiency analysis, that are particularly suited for the case of university production. Second, it uses a very detailed dataset on UK universities, integrating administrative data and results of Research Assessment Exercise (REA) with independent data on ISI publications. Third, for the first time efficiency estimates are carried out in parallel on universities and on collections of departments in four disciplinary areas (Engineering and Technology, Medicine, Natural Sciences, Social Sciences and Humanities), examining in depth the heterogeneity of scientific fields and the importance of compositional effects at university level. The paper is organised as follows. Section 2 develops the various arguments for expecting positive or negative effects from this trend, based on the literature, and surveys the state of the art in empirical research. Section 3 introduces the dataset and the methodology. Section 4 discusses the aggregate results, while Section 5 introduces data by discipline and discusses patterns emerging from the efficiency analysis. Section 6 concludes.