Competition and concentration in the academic research industry: An empirical analysis of the sector dynamics in Australia 1990-2008

In the last two or three decades, many countries have used various market instruments to steer and manage their academic research sector. Proponents of a market approach claim greater efficiency and sharper incentives while critics point to the peculiarity of the university sector that is likely to cause an inefficient stratification amongst universities. This paper applies a market convergence model to empirically test the hypothesis that competition leads to a more concentrated research industry. The results from Australia show that less research-intensive universities improve their research performance relatively faster, particularly in the early years of the policy reform. However, the lower performing universities have not been ‘catching up’ with the top performers but maximizing their individual potential, given their unique productivity constraints. We cannot confirm a ‘winner-takes-all’ process but there are signs of an increasing gap between universities, most likely due to accumulating advantages in the academic research sector.