Quality, Reputation and the Choice of Organizational Form
This paper revisits the hypothesis that nonprofit organizations emerge in markets that are characterized by contractual incompleteness because they ensure consumers against opportunistic behavior. We extend the Glaeser and Shleifer (2001) framework which studies an entrepreneur's optimal choice of organizational form and service quality when quality is non-contractible into a repeated interaction setting. The main result is that when reputations can be sustained, then for-profit status is the preferred organizational form and high quality services are ensured. This finding suggests that existing explanations of nonprofit organizations that focus entirely on contractual imperfections in the producer/consumer relationship may be inadequate.
|Date of creation:||09 Mar 2009|
|Publication status:||Published in Journal of Economic Behavior & Organization, 2009, 71 (2), pp.515. <10.1016/j.jebo.2009.02.014>|
|Note:||View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00677623|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Glaeser, Edward L. & Shleifer, Andrei, 2001.
Journal of Public Economics,
Elsevier, vol. 81(1), pages 99-115, July.
- Edward L. Glaeser & Andrei Shleifer, 1998. "Not-For-Profit Entrepreneurs," Harvard Institute of Economic Research Working Papers 1852, Harvard - Institute of Economic Research.
- Edward L. Glaeser & Andrei Shleifer, 1998. "Not-For-Profit Entrepreneurs," NBER Working Papers 6810, National Bureau of Economic Research, Inc.
- Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997.
"The Proper Scope of Government: Theory and an Application to Prisons,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 112(4), pages 1127-1161.
- Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1996. "The Proper Scope of Government: Theory and an Application to Prisons," NBER Working Papers 5744, National Bureau of Economic Research, Inc.
- Oliver Hart & Andrei Shleifer & Robert Vishny, 1996. "The Proper Scope of Government: Theory and an Application to Prisons," Harvard Institute of Economic Research Working Papers 1778, Harvard - Institute of Economic Research.
- Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-329, March-Apr.
- Carl Shapiro, 1986. "Investment, Moral Hazard, and Occupational Licensing," Review of Economic Studies, Oxford University Press, vol. 53(5), pages 843-862.
- Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-641, August.
- Johannes Hörner, 2002.
"Reputation and Competition,"
American Economic Review,
American Economic Association, vol. 92(3), pages 644-663, June.
- Johannes Hörner, "undated". "Reputation and Competition," Penn CARESS Working Papers ddea76857b552544844e6eb28, Penn Economics Department.
- Johannes Hörner, "undated". ""Reputation and Competition''," CARESS Working Papres 99-02, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
- Susan Rose-Ackerman, 1996. "Altruism, Nonprofits, and Economic Theory," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 701-728, June.
- repec:hrv:faseco:33078971 is not listed on IDEAS
- David Easley & Maureen O'Hara, 1983. "The Economic Role of the Nonprofit Firm," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 531-538, Autumn.
- repec:hrv:faseco:30727607 is not listed on IDEAS
- Benoit, Jean-Pierre & Krishna, Vijay, 1985. "Finitely Repeated Games," Econometrica, Econometric Society, vol. 53(4), pages 905-922, July.
When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-00677623. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)
If references are entirely missing, you can add them using this form.