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Does market size matter for charities?

Author

Listed:
  • Lapointe, Simon
  • Perroni, Carlo
  • Scharf, Kimberley
  • Tukiainen, Janne

Abstract

We analyze implications of market size for market structure in the charity sector. While a standard model of oligopolistic for-profit competition predicts a positive relationship between market size and firm size, our analogous model of competition between prosocially motivated charities predicts no such correlation. If charities are biased towards their own provision, a positive association between market size and provider size can arise. We examine these predictions empirically for six different local charity markets. Our empirical findings suggest that charities do not solely pursue prosocial objectives, and that increased competition in the charity sector can lead to rationalization in provision.

Suggested Citation

  • Lapointe, Simon & Perroni, Carlo & Scharf, Kimberley & Tukiainen, Janne, 2018. "Does market size matter for charities?," Journal of Public Economics, Elsevier, vol. 168(C), pages 127-145.
  • Handle: RePEc:eee:pubeco:v:168:y:2018:i:c:p:127-145
    DOI: 10.1016/j.jpubeco.2018.10.003
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    More about this item

    Keywords

    Competition in charity sectors; Market structure;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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