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Are donors afraid of core costs? Economies of scale and contestability in charity markets
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Perroni, Carlo, Pogrebna, Ganna, Sandford, Sarah and Scharf, Kimberley (2019) Are donors afraid of core costs? Economies of scale and contestability in charity markets. The Economic Journal, 129 (622). pp. 2608-2636. uez006. doi:10.1093/ej/uez006 ISSN 0013-0133.
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Official URL: https://doi.org/10.1093/ej/uez006
Abstract
We study contestability in charity markets where non-commercial, not-for-profit providers supply a homogeneous collective good through increasing-returns-to-scale technologies.
Unlike in the case of for-profit competition, the absence of price-based sales contracts for charities means that fixed costs can translate into entry barriers, protecting the position of an inefficient incumbent; or, conversely, they can make it possible for inefficient newcomers to contest the position of a more efficient incumbent. Evidence from
laboratory experiments show that fixed cost driven trade-offs between payoff dominance and perceived risk can lead to inefficient technology adoption.
Item Type: | Journal Article | ||||||||
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Divisions: | Faculty of Social Sciences > Economics | ||||||||
Journal or Publication Title: | The Economic Journal | ||||||||
Publisher: | Oxford University Press | ||||||||
ISSN: | 0013-0133 | ||||||||
Official Date: | August 2019 | ||||||||
Dates: |
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Volume: | 129 | ||||||||
Number: | 622 | ||||||||
Page Range: | pp. 2608-2636 | ||||||||
Article Number: | uez006 | ||||||||
DOI: | 10.1093/ej/uez006 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||||
Date of first compliant deposit: | 24 July 2018 | ||||||||
Date of first compliant Open Access: | 6 June 2019 | ||||||||
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