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The Roles of Government and Nonprofit Suppliers in Mixed Industries

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  • Kanika Kapur

    (Rand Corporation)

  • Burton A. Weisbrod

    (Northwestern University)

Abstract

In what ways, if any, does the behavior of government and nonprofit organizations differ? This article examines evidence from two industries-nursing homes and mentally handicapped facilities-to determine whether government and nonprofit organization behavior differs in identifiable dimensions and, if it does, why the differences occur. Behavior is studied in terms of consumer access, as measured by the use of waiting lists, and output quality, as measured by consumer satisfaction. Considerable differential behavior is found across the two institutional forms, even though both governmental and nonprofit organizations are subject to the nondistribution constraint. By contrast with private firms, both types of organizations may not lawfully distribute profit or surplus to owners, managers, or trustees. The behavioral differences found are consistent with varied models, one of which is that government and nonprofit providers have different objective functions, trading off quality and consumer access differently as government pursues a supplier-of-last-resort objective function.

Suggested Citation

  • Kanika Kapur & Burton A. Weisbrod, 2000. "The Roles of Government and Nonprofit Suppliers in Mixed Industries," Public Finance Review, , vol. 28(4), pages 275-308, July.
  • Handle: RePEc:sae:pubfin:v:28:y:2000:i:4:p:275-308
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    References listed on IDEAS

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    1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    2. Paul J. Devereux & Burton A. Weisbrod, "undated". "Complaints and Geographic Mobility as Responses to Dissatisfaction with Public Services," IPR working papers 96-20, Institute for Policy Resarch at Northwestern University.
    3. Badelt, Christoph & Weiss, Peter, 1990. "Specialization, Product Differentiation and Ownership Structure in Personal Social Services: The Case of Nursery Schools," Kyklos, Wiley Blackwell, vol. 43(1), pages 69-89.
    4. Richard G. Frank & David S. Salkever, 1994. "Nonprofit Organizations in the Health Sector," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 129-144, Fall.
    5. Richard Steinberg & Burton A. Weisbrod, "undated". "Pricing and Rationing by Nonprofit Organizations with Distributional Objectives," IPR working papers 97-28, Institute for Policy Resarch at Northwestern University.
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    Citations

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    Cited by:

    1. Steinberg, Richard & Weisbrod, Burton A., 2005. "Nonprofits with distributional objectives: price discrimination and corner solutions," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2205-2230, December.
    2. Jeffrey P. Ballou, 2008. "Do Nonprofit And Government Nursing Homes Enter Unprofitable Markets?," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 241-260, April.
    3. Shabbar Jaffry & Alexandros Apostolakis, 2011. "Evaluating individual preferences for the British Museum," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 35(1), pages 49-75, February.
    4. Di Giorgio, L. & Filippini, M. & Masiero, G., 2015. "Structural and managerial cost differences in nonprofit nursing homes," Economic Modelling, Elsevier, vol. 51(C), pages 289-298.
    5. Stijn VAN PUYVELDE & Marc JEGERS, 2016. "Heterogeneity and self-selection into nonprofit management," CIRIEC Working Papers 1603, CIRIEC - Université de Liège.
    6. Ballou, Jeffrey P. & Weisbrod, Burton A., 2003. "Managerial rewards and the behavior of for-profit, governmental, and nonprofit organizations: evidence from the hospital industry," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1895-1920, September.
    7. Chau, Nancy H. & Huysentruyt, Marieke, 2006. "Nonprofits and public good provision: A contest based on compromises," European Economic Review, Elsevier, vol. 50(8), pages 1909-1935, November.
    8. Lam, Marcus & Klein, Sacha & Freisthler, Bridget & Weiss, Robert E., 2013. "Child center closures: Does nonprofit status provide a comparative advantage?," Children and Youth Services Review, Elsevier, vol. 35(3), pages 525-534.
    9. Jody Sindelar & Todd Olmstead, 2004. "Does the Impact of Managed Care on Substance Abuse Treatment Services Vary By Profit Status?," NBER Working Papers 10745, National Bureau of Economic Research, Inc.
    10. Laura Di Giorgio & Massimo Filippini & Giuliano Masiero, 2012. "The impact of the institutional form on the cost efficiency of nursing homes," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 1203, USI Università della Svizzera italiana.
    11. Burcay Erus & Burton Weisbrod, 2003. "Objective Functions and Compensation Structures in Nonprofit and For-Profit Organizations. Evidence from the "Mixed" Hospital Industry," NBER Chapters,in: The Governance of Not-for-Profit Organizations, pages 117-142 National Bureau of Economic Research, Inc.

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