Academic Salaries and Public Evaluation of University Research: Evidence from the UK Research Excellence Framework

We study the effects of public evaluation of university research on the pay structures of academic departments. A simple equilibrium model of university pay determination shows how the pay-performance relationship can be explained by the incentives inherent in the research evaluation process. We then analyse the pay-performance relationship using data on the salary of all UK university full professors, matched to the performance of their departments from the 2014 UK government evaluation of research, the Research Excellence Framework (REF). A cross sectional empirical analysis shows that both average pay level and pay inequality in a department are positively related to performance. It also shows that the pay-performance relationship is driven by a feature of the research evaluation that allows academics to transfer the affiliation of published research across universities. To assess the effect of the REF on pay structure, we take advantage of the time dimension of our data and of inherent uncertainty in the evaluation of the performance of academic departments generated by the rules of the exercise. Our results indicate that higher achieving departments benefit from increased subsequent hiring and higher professorial salaries with the salary benefits of REF performance concentrated among the highest paid professors

Endougenous Timing in a Mixed Duopoly

This paper applies the framework of endogenous timing in games to mixed quantity duopoly, wherein a private domestic or foreign firm competes with a public, welfare maximizing firm. We show that simultaneous play never emerges as a subgame-perfect equilibrium of the extended game, in sharp contrast to private duopoly games. We provide sufficient conditions for the emergence of public and/or private leadership equilibrium. In all cases, private profits and social welfare are higher than under the corresponding Cournot equilibrium. From a methodological viewpoint we make extensive use of the basic results from the theory of supermodular games in order to avoid common extraneous assumptions such as concavity, existence and uniqueness of the different equilibria, whenever possible. Some policy implications are drawn, in particular those relating to the merits of privatization

Chicken or Egg. Which Should Come First, Privatisation or Liberalisation?

This paper identifies an industrial policy instrument in the timing of privatisation, relative to the timing of liberalisation of a public firm's market, defined as the lifting of legal barriers to entry by other firms. It is shown that the long run market competitiveness and the privatised firm efficiency are highly sensitive to this decision, and that the choice whether privatisation should precede liberalisation or vice versa depends on the government's preferences and on the relationship between competitive pressure and cost efficiency of the privatised firm. We identify conditions under which the case in which liberalisation preceeding privatisation Pareto dominates the opposite timing.

Efficiency and Privatisation in Imperfectly Competitive Industries.

If a public firm is managed less efficiently than private producers facing similar conditions, then privatization will increase the overall efficiency of the industry and benefit society. This paper challenges this apparently innocuous conclusion. As long as the private firms' efficiency improves as a result of competition, then it will also be higher when they are subjected to "unfair" competition from a public oligopolist with no budget constraint. The author shows that it may happen that the loss inefficiency due to the relatively inefficient public firm is more than compensated by gains in the efficiency of the private firms. Copyright 1991 by Blackwell Publishing Ltd.