The expansion of opportunity in higher education and the recognition of the influence of academic research on economic development have motivated policy reforms in many national systems of higher education including Japan. Many of these national reforms involve facilitating market forces in higher education, which is a new context for many universities. What has been learned about the impacts of these policies on the university sector? This paper will review research on the three primary policy instruments for creating market competition in a sector: policies altering the basic conditions of a market – the framework laws and values within which universities operate; policies affecting market structure – the number of buyers and sellers, the pricing of goods and services, freeing and simulating markets; and policies directly affecting the conduct of buyers and sellers – government regulation and the provision of information. Given the recent regulatory developments in Japanese higher education, the paper will particularly focus on the design of quality assurance policies in the university sector.