Competition and Mergers among Nonprofits
AbstractShould mergers among nonprofit organizations be regulated differently than mergers among for-profit firms? The relevant empirical literature is highly controversial, the theoretical literature is scarce. I analyze the question by modeling duopoly competition with quality-differentiated goods. I compare welfare effects of mergers between firms with the effects of mergers between nonprofits dominated by consumers, workers, suppliers, and pure donors respectively. I find that mergers both among firms and among most types of nonprofits do not increase welfare. Mergers among consumerdominated nonprofits, however, can improve welfare. These results imply for competition law and regulation that “nonprofit” might be too crude a label for organizations with varying goals. Consequently, mergers among certain nonprofit organizations should not necessarily be treated in the same way as mergers among for-profit firms – a notion that is absent in current merger guidelines both in the US and the EU.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2007-82.
Date of creation: 2007
Date of revision:
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Nonprofits; Mergers; Antitrust; Governance; Owner Objectives; Notfor- profit Sector; Organizational Choice;
Other versions of this item:
- L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
- L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-20 (All new papers)
- NEP-COM-2007-10-20 (Industrial Competition)
- NEP-IND-2007-10-20 (Industrial Organization)
- NEP-MIC-2007-10-20 (Microeconomics)
- NEP-REG-2007-10-20 (Regulation)
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