This article shows how an economic perspective can be used to frame or reframe fundamental issues in higher education, including many current policy questions, not least the responsiveness of institutions to competition and market forces. It points out the danger that policymakers will not appreciate the possibly perverse consequences of economically ill-informed initiatives. The article first appeared in Summer 1969. "Higher Education Review" periodically looks retrospectively at earlier work which was seminal or prescient and has continuing relevance to current issues in postsecondary education.