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The Revealed Objective Functions of Nonprofit Firms

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  • Richard Steinberg

Abstract

Although assertions have often been made about the objectives underlying the behavior of nonprofit firms, there has been no empirical confirmation of these assertions. This article proposes a way to infer a nonprofit organization's objective function by estimating the marginal donative product of its fundraising. Panel data estimates derived by using Hildreth and Houck's (1968) random coefficients model, suggest that welfare, education, and arts firms are "service maximizers," that health firms are budget maximizers, and that the objective of research firms cannot be ascertained within the family of objective functions considered.

Suggested Citation

  • Richard Steinberg, 1986. "The Revealed Objective Functions of Nonprofit Firms," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 508-526, Winter.
  • Handle: RePEc:rje:randje:v:17:y:1986:i:winter:p:508-526
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    References listed on IDEAS

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    Cited by:

    1. Susan F. Lu, 2016. "The Role of Donations in Quality Disclosure: Evidence from Nonprofit Nursing Homes Full Access," American Journal of Health Economics, MIT Press, vol. 2(4), pages 431-462, Fall.
    2. repec:eee:jeborg:v:137:y:2017:i:c:p:1-18 is not listed on IDEAS
    3. Khanna, Jyoti & Sandler, Todd, 2000. "Partners in giving:: The crowding-in effects of UK government grants," European Economic Review, Elsevier, vol. 44(8), pages 1543-1556, August.
    4. Shriver, Scott K. & Srinivasan, V. Seenu, 2011. "What If Marketers Put Their Customers ahead of Profits?," Research Papers 2091, Stanford University, Graduate School of Business.
    5. Craig E. Landry & Andreas Lange & John A. List & Michael K. Price & Nicholas G. Rupp, 2010. "Is a Donor in Hand Better Than Two in the Bush? Evidence from a Natural Field Experiment," American Economic Review, American Economic Association, pages 958-983.
    6. Searing Elizabeth A. M., 2014. "Charitable (Anti)Trust: The Role of Antitrust Regulation in the Nonprofit Sector," Nonprofit Policy Forum, De Gruyter, vol. 5(2), pages 1-28, October.
    7. Nan L. Maxwell & Dana Rotz & Christina Garcia, 2015. "Data and Decision Making: Same Organization, Different Perceptions," Mathematica Policy Research Reports 75eff9db7c7842259ee869566, Mathematica Policy Research.
    8. Peter G. Backus, 2012. "Gibrat’s law and legacy for non-profit organisations: a non-parametric analysis," Working Papers 2012/8, Institut d'Economia de Barcelona (IEB).
    9. Petra Brhlikova, 2006. "Mixed Competition and Welfare under Various Nonprofit Objectives Mixed Competition under Various Cost Configurations," CERGE-EI Working Papers wp310, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    10. Ettner, Susan L. & Hermann, Richard C., 2001. "The role of profit status under imperfect information: evidence from the treatment patterns of elderly Medicare beneficiaries hospitalized for psychiatric diagnoses," Journal of Health Economics, Elsevier, vol. 20(1), pages 23-49, January.
    11. Paul Gertler & Jennifer Kuan, 2009. "Does It Matter Who Your Buyer Is? The Role of Nonprofit Mission in the Market for Corporate Control of Hospitals," Journal of Law and Economics, University of Chicago Press, vol. 52(2), pages 295-306, May.
    12. Gong, Ning & Grundy, Bruce D., 2014. "The design of charitable fund-raising schemes: Matching grants or seed money," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 147-165.
    13. Andrea Baldin & Trine Bille & Andrea Ellero & Daniela Favaretto, 2016. "Multiobjective optimization model for pricing and seat allocation problem in non profit performing arts organization," Working Papers 20, Department of Management, Università Ca' Foscari Venezia.
    14. Jegers, Marc, 2011. "Financing constraints in nonprofit organisations: A 'Tirolean' approach," Journal of Corporate Finance, Elsevier, vol. 17(3), pages 640-648, June.
    15. Ellert, Alexander & Urmann, Oliver, 2010. "Quality differentiation if market share matters," Working Papers on Risk and Insurance 25, University of Hamburg, Institute for Risk and Insurance.
    16. Aidan R. Vining, 2016. "What Is Public Agency Strategic Analysis (PASA) and How Does It Differ from Public Policy Analysis and Firm Strategy Analysis?," Administrative Sciences, MDPI, Open Access Journal, vol. 6(4), pages 1-31, December.
    17. repec:mpr:mprres:6108 is not listed on IDEAS
    18. Faulk Lewis, 2014. "Overcoming the Cause of Failure and the Role of Issue Salience: Toward a Comprehensive Theory for Nonprofit Activity and Competition in a Three-Sector Economy," Nonprofit Policy Forum, De Gruyter, vol. 5(2), pages 1-31, October.
    19. Khanna, Jyoti & Posnett, John & Sandler, Todd, 1995. "Charity donations in the UK: New evidence based on panel data," Journal of Public Economics, Elsevier, vol. 56(2), pages 257-272, February.
    20. Christoph Starke, 2012. "Serving the many or serving the most needy?," Economics of Governance, Springer, vol. 13(4), pages 365-386, December.
    21. Víctor Fernández-Blanco & Luis César Herrero & Juan Prieto-Rodríguez, 2013. "Performance of cultural heritage institutions," Chapters,in: Handbook on the Economics of Cultural Heritage, chapter 24, pages i-i Edward Elgar Publishing.

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