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Nonprofit Organization and the Division of Labor: A Theoretical Perspective

  • Vladislav Valentinov

    ()

This paper asks whether nonprofit organization can have a positive rationale in an economy based on the division of labor, taking into account that the process of the division of labor occurs through profit-motivated economic behavior. By reconsidering existing economic theories of nonprofit organization in the context of the theory of the division of labor, the paper shows nonprofit organization to be an institutional consequence of two limitations on the division of labor: high coordination costs among interdependent agents and the existence of production-related, as opposed to consumption-related, preferences. These limitations prevent the system of the division of labor from fully gratifying the consumption preferences of economic agents and, thereby, create a functional niche for nonprofit organization. Copyright International Atlantic Economic Society 2006

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File URL: http://hdl.handle.net/10.1007/s11293-006-9032-z
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Article provided by International Atlantic Economic Society in its journal Atlantic Economic Journal.

Volume (Year): 34 (2006)
Issue (Month): 4 (December)
Pages: 435-447

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Handle: RePEc:kap:atlecj:v:34:y:2006:i:4:p:435-447
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  1. Locay, Luis, 1990. "Economic Development and the Division of Production between Households and Markets," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 965-82, October.
  2. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
  3. Yang, Xiaokai & Borland, Jeff, 1991. "A Microeconomic Mechanism for Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 460-82, June.
  4. Furubotn, Eirik G & Pejovich, Svetozar, 1972. "Property Rights and Economic Theory: A Survey of Recent Literature," Journal of Economic Literature, American Economic Association, vol. 10(4), pages 1137-62, December.
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