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The Roles of Government and Nonprofit Suppliers in Mixed Industries

  • Kanika Kapur

    (Rand Corporation)

  • Burton A. Weisbrod

    (Northwestern University)

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.

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File URL: http://pfr.sagepub.com/content/28/4/275.abstract
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Article provided by in its journal Public Finance Review.

Volume (Year): 28 (2000)
Issue (Month): 4 (July)
Pages: 275-308

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Handle: RePEc:sae:pubfin:v:28:y:2000:i:4:p:275-308
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  1. 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.
  2. Armen A. Alchian & Harold Demsetz, 1971. "Production, Information Costs and Economic Organizations," UCLA Economics Working Papers 10A, UCLA Department of Economics.
  3. Paul J. Devereux & Burton A. Weisbrod, . "Complaints and Geographic Mobility as Responses to Dissatisfaction with Public Services," IPR working papers 96-20, Institute for Policy Resarch at Northwestern University.
  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, . "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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