Do cost considerations justify the current structure of production of
extension services in which one or more providers exists in virtually all of
the contiguous U.S. states? Provision of extension services has sizable cost
implications for the host institutions. Yet, to our knowledge, there has
been virtually no analysis of the impact of extension on higher education
costs. Using academic year 1995–1996 data, we estimate a multiproduct cost
function for 1,445 public institutions of higher education in the United
States, including 65 that provide extension services. We find evidence of
significant economies of scale with respect to the provision of extension
services but no evidence of significant economies of scope between the
provision of extension and the production of research, undergraduate
education, or graduate education.