The research uses postsecondary education in the United States as a test case for broader claims of superior efficiency of production from private sector producers as compared to public sector producers. Using linear regression and structural equation modeling on secondary data from 230 national universities, I provide evidence that private universities are more efficient in production of postsecondary education than public universities, and that the relationship is not mediated by competition. Using qualitative analysis of semi-structured depth interviews with both private and public university administrators, I provide evidence that personal motivation is also not a mediator of the relationship, but bureaucratic motivation for inefficiency likely is.

The research contributes to knowledge by examining and clarifying the explanatory power and boundary conditions of x-inefficiency, expectancy theory, and budget-maximizing theory in the context of higher education. The research contributes to practice by offering guidance to both public and private university administrators on improving efficiency. Policy recommendations are provided with regard to higher education generally, as are recommendations for future research.