Colleges and universities are privatizing various institutional components and are seeking greater autonomy from state government. In defining privatization, the paper makes the distinction between privatizing and contracting, and notes six areas where a good or service can be owned or managed by the government or by the private sector: ownership of physical property, production, management, financing, allocation, and regulation. Also examined are the underlying forces behind privatization, including a changing political climate, declining public confidence in higher education, declining state government appropriations, and the belief that more efficient allocation of resources will lead to better services at reduced cost. The typology offered for understanding privatization is organized into four major areas: (1) public production with public finance, which involves government production of goods and services financed through taxes; (2) public production with private finance in higher education, user fees such as tuition and student fees are typical examples; (3) private production with government financing, which includes contracting out, deregulation, franchises, subsidies and grants, and vouchers; and (4) private production, which encompasses load-shedding (government stops providing the service) and divestiture (government sells its holdings to the private sector). (Contains 49 references.) (CH)