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Scale economies in nonprofit provision, technology adoption and entry
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Scharf, Kimberly A. (2011) Scale economies in nonprofit provision, technology adoption and entry. Discussion Paper. Coventry: Centre for Economic Policy Research. CEPR Discussion Paper (No.8606). (Unpublished)
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Abstract
We study competition between nonprofit providers supplying a collective service through increasing-returns-to-scale technologies. When providers adopt a not-for-profit mission, the absence of a residual claimant can impede entry, protecting the position of an inefficient incumbent. Moreover, when the goods provided are at least partly public in nature, buyers face individual incentives to divert donations towards providers that adopt low-fixed cost technologies, and so providers may forgo the adoption of more efficient technologies that require fixed costs. In these situations, government grants in support of core costs can have a non-neutral effect on entry, technology adoption, and industry performance.
Item Type: | Working or Discussion Paper (Discussion Paper) | ||||
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Subjects: | H Social Sciences > HB Economic Theory | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Series Name: | CEPR Discussion Paper | ||||
Publisher: | Centre for Economic Policy Research | ||||
Place of Publication: | Coventry | ||||
Official Date: | October 2011 | ||||
Dates: |
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Number: | No.8606 | ||||
Institution: | University of Warwick | ||||
Status: | Not Peer Reviewed | ||||
Publication Status: | Unpublished | ||||
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