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Distance teaching programmes are now a significant and expanding component of university education. The importance of economies of scale in achieving unit costs comparable to those of conventional education is a recurrent theme in literature on large distance teaching universities. A rarely addressed question is whether small distance teaching universities which cannot avail themselves of the same economies of scale, can operate as efficiently given their relatively low levels of student enrolment. This text discusses whether there are alternative operational and institutional strategies which small distance teaching universities can adopt to prove as cost efficient as their larger counterparts. As the efficiency of the outputs of large and small distance teaching universities may differ with respect to the quality of their resources, this text considers the implications of such differences on learning and on the academic quality of the programmes offered.