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In Medio Stat Virtus: Does A Mixed Economy Increase Welfare?

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  • Alessandro FEDELE
  • Sara DE PEDRI

Abstract

Over the past few decades, social enterprises have grown remarkably. This paper investigates how social enterprises affect access to social services (e.g., education and health-care) and utilitarian welfare. To this end, two economic systems are compared: a market economy system, where all firms are profit maximizers, and a mixed economy system, where both for-profit businesses and social enterprises are present. Findings show that individuals are more likely to have access to social services within mixed economy. Moreover, conditions are derived under which utilitarian welfare is larger within mixed economy. Public policies in support of social enterprises (e.g., subsidies) are shown to result in the following trade-off: access to social services is further enhanced but utilitarian welfare is more likely to be lower than that within market economy.

Suggested Citation

  • Alessandro FEDELE & Sara DE PEDRI, 2016. "In Medio Stat Virtus: Does A Mixed Economy Increase Welfare?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 87(3), pages 345-363, December.
    • Handle: RePEc:bla:annpce:v:87:y:2016:i:3:p:345-363
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    References listed on IDEAS

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    1. Becchetti, Leonardo & Palestini, Arsen & Solferino, Nazaria & Elisabetta Tessitore, M., 2014. "The socially responsible choice in a duopolistic market: A dynamic model of “ethical product” differentiation," Economic Modelling, Elsevier, vol. 43(C), pages 114-123.
    2. de Fraja, Giovanni & Delbono, Flavio, 1990. "Game Theoretic Models of Mixed Oligopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 4(1), pages 1-17.
    3. Carlo Borzaga & Sara Depedri & Ermanno Tortia, 2010. "The Growth of Organizational Variety in Market Economies: The Case of Social Enterprises," Euricse Working Papers 1003, Euricse (European Research Institute on Cooperative and Social Enterprises).
    4. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2012. "Quality competition with profit constraints," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 642-659.
    5. D. Joseph Stiglitz, 2009. "Moving Beyond Market Fundamentalism To A More Balanced Economy," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 80(3), pages 345-360, September.
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    Cited by:

    1. Alessandro Fedele & Raffaele Miniaci, 2017. "Stakeholder Orientation and Capital Structure in the Social Care Sector," BEMPS - Bozen Economics & Management Paper Series BEMPS40, Faculty of Economics and Management at the Free University of Bozen.
    2. Emanuele Bacchiega & Elias Carroni & Alessandro Fedele, 2024. "On the Existence of Nash Equilibria in Two-Sided Hotelling Models," BEMPS - Bozen Economics & Management Paper Series BEMPS106, Faculty of Economics and Management at the Free University of Bozen.
    3. Emanuele Bacchiega & Elias Carroni & Alessandro Fedele, 2023. "Monopolistic Duopoly," BEMPS - Bozen Economics & Management Paper Series BEMPS101, Faculty of Economics and Management at the Free University of Bozen.

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    More about this item

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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