Higher education, especially that which is publicly funded, is under increasing scrutiny from politicians and the public as competition in this sector increases. Susanne Warning provides a comprehensive analysis of the strategic positioning of public universities as service providers in a competitive sector. The author develops two distinct theoretical approaches to the analysis of public universities. The first is the concept of strategic groups, originating in management theory. It implies that due to different returns on investment in teaching quality and research quality, heterogeneity will exist in the university sector. The second approach involves a three-stage duopoly game of competition between universities, and is underpinned by the industrial economics literature. Universities in this formal equilibrium model of differentiation position themselves in terms of teaching and research quality in order to attract students. Although the analysis is based on data for German publicly funded universities, however, the author's conclusions offer important insights for all countries where publicly funded universities play a role, particularly in the current climate of shifts towards more competitive university systems. With an exclusive combination of economic analysis and institutional data, this book will prove invaluable for anyone with a particular interest in the economics of higher education.