Mixed Competition and Welfare under Various Nonprofit Objectives Mixed Competition under Various Cost Configurations

Petra Brhlikova

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: I study the competition between one nonprofit and one for-profit firm under various objective functions of the nonprofit firm. The two firms optimize their objectives with respect to quality and price of their products. The nonprofit firm serves one-half of the market under pure quality maximization, while it serves about twothirds under two other objective functions that in addition to quality, include market share. In contrast, the market share and profit of the for-profit firm decrease, and consumer and total surplus increase. For the case of quality maximization pursued by the nonprofit firm, I derive equilibria for several cost configurations. Qualities and prices offered depend on the steepness of the cost function as well as on the proportion between fixed and variable costs.

Keywords: Nonprofit; For-profit; Competition (search for similar items in EconPapers)
JEL-codes: L11 L21 L31 (search for similar items in EconPapers)
Date: 2006-10
New Economics Papers: this item is included in nep-com and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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