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T HERE is a surprising dearth of analysis by economists of their institutional environment, the university.'One question that seems worthy of consideration is the effect of different institutional structures on productivity. For whatever reasons, universities do not have well-defined residual claimants with alienable rights to their assets, and not-for-profit organizations are usually at a comparative disadvantage when it comes to managing production. For example, there are the well-recognized horizon and incentive problems. Since universities cope with these issues in different ways, we can investigate the consequences of these organizational and property-rights structures.