Internal market forces have been successfully harnessed in the private sector for decades in order to improve companies' productivity and competitiveness.
In more recent times, the same concept has been introduced in public services - most recently in the health service - although with mixed results. The principle of creating internal market dynamics in any organisation or sector is, however, widely recognised to be an effective way of providing a better quality of service and value for money.
With this in mind, why can't internal market forces be harnessed in the provision of higher education teaching in the UK? Currently, most students apply for a whole degree of study at a particular university with the expectation that they will take all courses for their three or four years of study at a single university.
As a result, British universities compete with each other in attracting students. They use a variety of mechanisms, including the pursuit of tactics designed to improve the university's league-table ranking, marketing campaigns, or financial incentives, such as full or partial scholarships.
Yet while this competition has improved the quality of services provided by universities, students are still not benefiting as much as they should.
A truly free market for higher education would allow students to choose between individual courses from a large number of institutions.
Improving student choice at this finer-grain level would allow them to pick the best portfolio of courses from a wide range of universities anywhere in the UK. This would increase competition not only at aggregate degree level, but also at course level, and would result in better quality of higher education teaching and research.
This approach is made possible by the availability of high-speed communication technology at an affordable price, which means that students no longer have to be physically present at course venues.
Instead, they can attend distant courses online from wherever they happen to be at the time, using high-quality video-streaming over broadband internet.
Coursework could be delivered online while written exams could be held at any designated location under proper invigilation, a mechanism already used by universities for special circumstances.
Clearly, this would not include courses such as those based on laboratory experiments. Nonetheless, many courses lend themselves to distant learning and would therefore benefit from this approach.
The degree-awarding body in such a system could either be all of the universities involved in the provision of a course portfolio for a particular student, or a degree-awarding authority transcending university boundaries.
A not-too-dissimilar mechanism already exists at postgraduate level in the UK - for example, at the Institute of System Level Integration in Livingston, Scotland, which delivers MSc degrees with the involvement of four Scottish universities. The overall degree is awarded by each of the four.
As for course fees, students would be charged on an individual course level, rather than on a whole-degree or annual-fee basis. This would open the door for the provision of performance-related rewards for individual lecturers on the basis of the popularity of their courses.
This is of crucial importance to UK academia as performance-related pay is a quid pro quo of increased marketisation of the sector.
The role of the Government in this system should be that of a facilitator rather than a micro-manager. It would simply have to allow for internal market forces in higher education teaching through an appropriate framework of legislative guidelines as well as provision of technical assistance - for example, information systems and standard monitoring procedures.
It would then be up to universities to run the system in an innovative and entrepreneurial way. One could, for instance, envisage clusters of universities with complementary teaching capabilities coalescing in order to offer world-class degrees in specific areas.
Universities would also be able to contract out teaching certain modules to non-permanent staff on strict basis of need, thereby resulting in greater flexibility and increased efficiency.