Profit versus Nonprofit Firms in the Service Sector: A Formal Analysis of the Employment and Welfare Implications
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.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 95 (2005)
Issue (Month): 3 (May-June)
|Contact details of provider:|| |