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Profit versus Nonprofit Firms in the Service Sector: A Formal Analysis of the Employment and Welfare Implications

Author

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  • Luigi Bonatti

    () (Università di Bergamo)

  • Carlo Borzaga

    () (Università di Trento)

  • Luigi Mittone

    () (Università di Trento)

Abstract

We present a general equilibrium model where manufacturing and service firms coexist. The quality of the service depends on the workers' effort. Two institutional regimes are compared, in which the service-providing firms are for-profit enterprises or, alternatively, nonprofit organizations. The paper shows that the employment level, aggregate income and both the quantity and the quality of the service are higher when the service-providing firms are nonprofit organizations. Moreover, switching from one regime to the other has redistributive effects, and the equilibrium associated with the presence of nonprofit organizations is Pareto-superior if they enjoy a significant advantage at motivating their employees.

Suggested Citation

  • Luigi Bonatti & Carlo Borzaga & Luigi Mittone, 2005. "Profit versus Nonprofit Firms in the Service Sector: A Formal Analysis of the Employment and Welfare Implications," Rivista di Politica Economica, SIPI Spa, vol. 95(3), pages 137-164, May-June.
  • Handle: RePEc:rpo:ripoec:v:95:y:2005:i:3:p:137-164
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    Citations

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    Cited by:

    1. Flora Bellone & Patrick Musso & Lionel Nesta & Stefano Schiavo, 2010. "Financial Constraints and Firm Export Behaviour," The World Economy, Wiley Blackwell, vol. 33(3), pages 347-373, March.
    2. Gianluca Grimalda & Lorenzo Sacconi, 2005. "The Constitution of the Not-For-Profit Organisation: Reciprocal Conformity to Morality," Constitutional Political Economy, Springer, vol. 16(3), pages 249-276, September.
    3. Julie Dana & Christopher L. Gilbert, 2008. "Managing Agricultural Price Risk in Developing Countries," Department of Economics Working Papers 0819, Department of Economics, University of Trento, Italia.
    4. Lorenzo Sacconi & Stefano Moretti, 2004. "A Fuzzy Logic and Default Reasoning Model of Social Norm and Equilibrium Selection in Games under Unforeseen Contingencies," Department of Economics Working Papers 0412, Department of Economics, University of Trento, Italia.
    5. Luciano Andreozzi, 2008. "Property Rights and Investments: An Evolutionary Approach," Department of Economics Working Papers 0822, Department of Economics, University of Trento, Italia.
    6. Giuseppe Arbia & Giuseppe Espa & Diego Giuliani & Andrea Mazzitelli, 2009. "Clusters of firms in space and time," Department of Economics Working Papers 0902, Department of Economics, University of Trento, Italia.
    7. Christopher L. Gilbert, 2008. "How to Understand High Food Prices," Department of Economics Working Papers 0823, Department of Economics, University of Trento, Italia.
    8. Elisabetta De Antoni, 2008. "Minsky�s Upward Instability: the Not-Too-Keynesian Optimism of a Financial Cassandra," Department of Economics Working Papers 0812, Department of Economics, University of Trento, Italia.
    9. Christopher L. Gilbert, 2008. "Commodity Speculation and Commodity Investment," Department of Economics Working Papers 0820, Department of Economics, University of Trento, Italia.
    10. Lorenzo Sacconi, 2004. "A Social Contract Account for CSR as Extended Model of Corporate Governance (Part II): Compliance, Reputation and Reciprocity," Department of Economics Working Papers 0411, Department of Economics, University of Trento, Italia.
    11. Sandra Notaro & Alessandro Paletto & Roberta Raffaelli, 2008. "Does forest damage have an economic impact? A case study from the Italian Alps," Department of Economics Working Papers 0809, Department of Economics, University of Trento, Italia.
    12. K. Vela Velupillai, 2004. "The unreasonable ineffectiveness of mathematics in economics," Department of Economics Working Papers 0406, Department of Economics, University of Trento, Italia.
    13. Christopher L. Gilbert & Alexandra Tabova, 2004. "Commodity prices and debt sustainability," Department of Economics Working Papers 0404, Department of Economics, University of Trento, Italia.

    More about this item

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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