The establishment of teaching-only universities to subsidise a few elite research powerhouses has been put forward as part of a model for a perfect university system.

The theoretical model has been drawn up by two economists and was presented in a paper at a recent conference of the Royal Economic Society (RES).

The authors argue that resources in a government-funded higher education system should be concentrated on the most efficient institutions, with the result that those teaching the most students and conducting the most research most efficiently, get the most money.

But in the most extreme version of the model, in order to ensure wide access to higher education, the government would set up teaching-only universities that were competent to teach but not to carry out research.

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The ideas are presented by Gianni De Fraja, William Tyler professor of economics at the University of Leicester, and Paola Valbonesi, associate professor in the department of economics and statistics at the University of Padova in Italy.

A summary of their paper presented to the RES says that "some aspects of actual university provision match the ideal design, but others do not".

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"Optimal government policy is to concentrate research and teaching in the most productive universities," the study says.

While it does not matter where the majority of research is carried out, the same cannot be said of teaching, which has to take account of student mobility.

As a result, "concentrating teaching in some institutions means some students cannot attend university who would have benefited from doing so".

This leads to a trade-off between concentrating teaching and research in the most productive universities and maximising access to higher education.

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"This trade-off is drawn in sharp focus by the perfect information case: in this case, and only in this case, the government creates 'teaching-only' universities, allocating the total amount of research exclusively to the most productive institutions, and making all students, including those attending teaching-only universities, pay for research," the study says.

This scenario is not possible, however, when the government does not have perfect information about the productivity of universities, which in reality it does not, in which case all universities mix teaching and research, with concentration existing only to a limited degree.

john.gill@tsleducation.com.