Most universities have been organized as non-profit public or private institutions. Their objectives have not been clearly defined nor has their behavior been well understood. In practice, the management of universities is carried out by administrators who depend largely on government funding and/or private donations. They are subject to various forms of pressure applied by diverse groups each trying to use the university as a means of furthering its own objective. Such a situation not only causes resource misallocations but provides few incentives for improvement. The crucial question of how university efficiency can be improved is dealt with in this volume. The various facets of the question are treated including defining different functions of the university, improving efficiency through reorganization and the introduction of new techniques, the use of student evaluations and various methods of financing higher education. In addition, the question is raised about what types of research are needed in higher education to bring about significant increases in efficiency. (MJM)