The Roles of Government and Nonprofit Suppliers in Mixed Industries

Kanika Kapur () and Burton A. Weisbrod

IPR working papers from Institute for Policy Resarch at Northwestern University

Abstract: In what ways, if any, does the behavior of government and nonprofit organizations differ? This paper examines evidence from two industries‹nursing homes and mentally handicapped facilities‹to determine whether government and nonprofit organization behavior differs in identifiable dimensions, and if it does, why the differences occur. Behavior is studied in terms of consumer access, as measured by the use of waiting lists, and output quality, as measured by consumer satisfaction. Considerable differential behavior across the two institutional forms is found in both industries. The differences are consistent with varied models, one of which is that government and nonprofit providers have different objective functions, trading off quality and consumer access differently as government pursues a supplier-of-last-resort role.

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