Skip to content

Economic Implications of MOOCs in Higher Education: An Indian perspective

Download the WEA commentaries issue ›

By Binay Kumar Pathak*


The Government of India has proposed to set up a digital university and virtual laboratories in order to push digital education as envisaged by the National Education Policy (2020)1. While two digital universities have already been established in the last couple of years by the Governments of Kerala and Rajasthan, distance education and regular higher education institutions (HEIs) are also embracing digital mode in various forms and degrees2. The focus on digital education emanates from the global trends and penetration of information and communication technologies (ICT) in almost every sphere of our lives. While the Covid-19 pandemic accelerated the implementation of online education at all stages, EdTech companies in particular received impetus and attracted huge investments. The global EdTech investments, by the end of 2019, were to the tune of $18.66 billion3. In 2020, the EdTech market was valued at $89.49 billion4. Higher education (HE), characterized with horizontal diversification and plethora of possibilities in terms of skill enhancement, offers a wide range of opportunities for EdTech companies.  With this new mode of delivery of services and interaction, HE has gained variants of product differentiation in the already hierarchical market for HE. The market has become more diverse and segregated in terms of both price and quality. Product differentiation through mode of delivery of education dates back to the late 19th century when correspondence education emerged with the aid of postal services. Present differentiations riding on the growth of ICT seem to be competing with the mainstream classroom-based traditional model5. Out of these various differentiations, a particular group can be referred to as MOOCs (Massive Open Online Courses) which are gaining momentum through deliberate strategies and the emergence of web-based platforms in partnership with the leading universities of the world. These MOOCs are not limited to recording of lectures, but might also include simulations, games for practice and peer groups for discussions and evaluation. This paper seeks to bring out the economic implications of MOOCs for HE in general and Indian HE in particular.

Product, Cost and Pricing

   HE in India, the third largest system in the world, is characterized with rising fee-structure in HE which is influenced by decline in public expenditure on HE. Chandrashekhar and Ghosh (2020) present the alarming increase in fees across levels with the help of the NSSO data6. Whether the higher education institutions (HEIs) intend to cross-subsidise (public) or seek profiteering (private), the kind of services are closely associated with cost of provision or delivery of HE and pricing of such provisions. Being one of the labour-intensive services, HE suffers from Baumol’s cost-disease and is somewhat analogous to the labour-intensive services characterized with low productivity growth such as music and performing arts. Thus, mass availability of music over the internet and related issues of licence-fees, piracy and sustainability can also be attributed to the HE sector operating with MOOCs. While HEIs can either maximise quality or minimise price (Archibald & Feldman, 2006), any effort to reduce costs would imply compromising with quality for the traditional classroom based HE. MOOCs are being popularised as cost advantageous options available for large number of students across space and time.

The average cost (due to fixed cost mostly) of MOOCs or simply, the start-up cost can be higher than that of the traditional classroom based HE as the capital assets are expensive and they require adaptation with time due to compatibility requirements across networked systems including those owned by students. Thus, MOOCs might reduce some components of cost (labour) but add to others as bulk-cost remains a feature of equipment/devices and system-upgrades (Bapna et al, 2020). The cost advantages are expected from the low labour-cost (teaching staff) and the ability of reproduction (recordings of lectures and minimal cost to update test banks, notes and web-based resources). Thus, MOOCs are expected to cure Baumol’s cost disease (with low labour-cost) and reaping the benefits of economies of scale (with reproduction).  Though with reproduction, (HE) services are converted into commodities (McCowen, 2016; Chattopadhyay, 2020); MOOCs gain monopolistic advantage in terms of marginal cost approaching zero.7

Now, the marginal cost approaching zero would make the service delivery viable at higher scales only as demonstrated for HE in the USA (Marginson, 2004; Saltzman, 2014). Though the cost of providing education per student through MOOCs might be cheaper, it requires a considerable lead time and scale such as the cases for the University of Phoenix in the USA and the Open University in the UK (ibid, 2004). There are several platforms targeting selected courses with favourable responses from the students and the job-market such as management, data-science et cetera. Otherwise, the start-up cost might be higher depending upon the nature of the institutions and courses. Th us, the considerations of students and recognition in the job-market play important roles in viability of the MOOCs.


HEIs compete for students and staff depending upon their prestige, rank or quality in a market characterized with S(selection)-competition (Glennerster, 1991; Winston, 1999)) driving hierarchies in the market. Location plays an important role in decision-making by students and strategy-development by the HEIs. MOOCs, with advantages over space and time, [“asynchronous learning”] might attract students from any location on the globe. If students are not restricted with their cultural background and regulation, they would like to opt for the best course or university within their capability and purchasing power given the recognition and equivalence of courses. Therefore, the dynamics of competition for HEIs have changed with MOOCs. The existing positional good character of the HE, closely linked with the job-market, has gained new layers with the popularization of MOOCs. Traditionally, national and international dynamics of competition used to be different for HEIs (Marginson, 2006). But MOOCs with their spread across the globe through web-based platforms have narrowed the margins for competition. So, even with a proposed central digital university, two existing state digital universities, public platforms like SWAYAM, adoption of blended mode of teaching by HEIs; the competition in Indian HE is not limited to domestic HEIs only. They would compete with their foreign counterparts and web-based platforms operating in partnership with leading universities of the world. Thus, these new hierarchies of the HE market will enter into a different realm of competition.


With regard to MOOCs, the University Grants Commission of India promotes MOOCs through SWAYAM-a public platform and other portals under different schemes. but restrains the HEIs in India to collaborate with foreign web-based platforms in offering courses. Moreover, the Government (union and state levels) seem to be promoting digital universities but have no policy for regulating quality and competition. With restrictions on entry to the global market, Indian HEIs might lose a significant share of the market and the necessary large scale for minimisation of costs to compete with MOOCs. With soaring unemployment and disenchantment towards existing professional courses (as reflected in vacant seats even in reputed institutions and closure of engineering colleges), the growing interest of Indian youths in skill-enhancing MOOCs will benefit the foreign service providers as they might outcompete their Indian counterparts. Regulation of market is expected to be crucial in such situations. The natural monopoly characteristics of MOOCs may result in a very small number of courses associated with top institutions/academics dominating the world market and hence narrowing the range of academic perspectives that students may be exposed to. Indian HEIs struggling in international university rankings are poised to face challenges from the popularity of MOOCs offered by leading universities of the world. While MOOCs have their own disadvantages in terms of high attrition rates, lack of cultural compatibility and negative quality differential as compared to traditional classroom based HE; professional and skill enhancing courses offered by top ranking universities of the world might outcompete MOOCs offered by average HEIs. The implications for non-professional courses such as pure sciences, humanities and social sciences would add to the struggle of HEIs. While the focus on skill enhancing courses would limit the exposure of students to the world of knowledge, standardization of courses with scant lecturing opportunities may affect the career development of academics. Innovations in assessment to suit MOOCs such as peer evaluation and multiple-choice questions would also add to the narrowness of scope and exposure for students. Thus, the possibilities of cost advantages seem to be complemented with compromised quality. Apart from these, there are issues of privacy and intellectual property rights (IPR) involved, analogous to the performing arts (music) industry. Moreover, the web-based platforms gather a lot of information related to students and might utilise this information along the lines of social-media firms. As the developments in the ICT have impacted the processes of globalisation in different ways, MOOCs might prove to be incarnations for globalisation of HE against the debates and discussions over decolonisation of HE. Thus, policies for embracing digital path in HE should be pursued with requisite preparation and care.



Archibald, R.B. and Feldman, D.H. (2006). Explaining increases in Higher Education Costs. Working Paper No. 42, September, Department of Economics, College of William and Mary.

Bapna, A., K. Garg and A.Mehra (2020): Technology Intervention in Education: Digital Divide and the Aakash Tablet. Economic and Political Weekly. 55(10).

Baumol, W.J. and W. G. Bowen (1965). On the Performing Arts: The Anatomy of their Economic Problems. The American Economic Review. 55(2). 495-502

Chandrashekhar, C.P.  and J. Ghosh (2020). The alarming rise in education costs in New India. The Hindu Business Line. November 30, 2020.

Chattopadhyay, S. (2020). National Education Policy, 2020: An Uncertain Future for Indian Higher Education. Economic and Political Weekly. LV (46). 23-27.

Glennerster, H. (1991). Quasi-Markets for Education?  Economic Journal, 101 (408), September, 1268-76.

Marginson, S. (2004). Don’t Leave Me Hanging on the Anglophone: The Potential for Online Distance Higher Education in the Asia-Pacific Region. Higher Education Quarterly. 58(2/3). 74-113.

Marginson, S. (2006). Dynamics of national and global competition in higher education. Higher Education. 52. 1-39.

McCowan, T. (2016). Universities and the post-2015 development agenda: an analytical framework. Higher Education.72. 505-523.

Saltzman, G. (2014). The Economics of MOOCs. 2014 NEA Almanac of Higher Education.

Winston, G.C. (1999). Subsidies, Hierarchy and Peers: The Awkward Economics of Higher Education. Journal of Economic Perspectives .13(1). 13-36.


* Assistant Professor & Head, Department of Economics, Ram Nirikshan Atma Ram College, Samastipur-848101 Bihar (a constituent unit of Lalit Narayan Mithila University, Darbhanga),

1. As proposed in the Union Budget (2022-23) available from India Budget | Ministry of Finance | Government of India 2022-23

2. Kerala and Rajasthan are provinces (states) in India.

3. The rise of online learning during the COVID-19 pandemic | World Economic Forum (


5. The History of Online Schooling (

6. The History of Online Schooling (

7. National Sample Survey Organisation of India.

8. The pedagogical implications for such conversions of service into commodity have been discussed in detail by McCowan (2016) and Chattopadhyay (2020).

From: pp.7-9 of WEA Commentaries 12(1), April 2022

Download WEA commentaries Volume 12, Issue No. 1, April 2022 ›

Respond to this article

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Please note that your email address will not be published.