Handbook of Research on Nonprofit Economics and Management
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Handbook of Research on Nonprofit Economics and Management

Second Edition

Edited by Bruce A. Seaman and Dennis R. Young

Building on the success of the first edition, this thoroughly revised and expanded edition explores (1) areas of general agreement from previous research; (2) areas of conflicting results and unexplored questions; (3) the relative roles of theory, data availability and empirical analysis in explaining gaps in our knowledge; and (4) what must be done to improve our knowledge and extend the literature. Selected original chapters addressing especially challenging topics include the value of risk management to nonprofit decision-making; nonprofit wages theory and evidence; the valuation of volunteer labor; property tax exemption for nonprofits; when is competition good for the third sector; and product diversification and social enterprise; international perspectives; the application of experimental research and the macroeconomic effects of the nonprofit sector.
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Chapter 7: Markets with competition between for-profit and nonprofit firms

Eleanor Brown and Al Slivinski

Abstract

We provide an overview of theoretical research on markets in which for-profit and nonprofit firms compete. We discuss how specific notions of altruism – whether it is scarce, whether it is pure or warm-glow – affect outcomes in such markets. Since the nonprofit organizational form carries with it both advantages and disadvantages relative to for-profits, research devoted to explaining the conditions under which the two can coexist is discussed, and we then move on to show the kinds of predictions of firm behavior that are made by models in which such coexistence can occur. The chapter concludes with a discussion of where research on these questions seems to be headed, and the possible implications of the recent development of hybrid forms allowing firms to incorporate as for-profit with a declared social mission.

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