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Nonprofits and the Scope of Government: Theory and an Application to the Health Sector

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  • Karen Eggleston

Abstract

Nonprofits supply many tax-financed services like healthcare and education. Yet nonprofits are absent from the canonical property rights theory of ownership. Extending the government “make or buy” decision to nonprofits and ex post frictions based on contracts as reference points suggests that contracting out to a nonprofit can be optimal when “mission” alignment credibly signals adherence to the spirit and not just the letter of the contract in unforeseen contingencies. The model sheds light on differential nonprofit presence across the spectrum of basic services, as illustrated by an application to the health sector.

Suggested Citation

  • Karen Eggleston, 2024. "Nonprofits and the Scope of Government: Theory and an Application to the Health Sector," NBER Working Papers 32020, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32020
    Note: EH PE
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    More about this item

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H4 - Public Economics - - Publicly Provided Goods
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • I0 - Health, Education, and Welfare - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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