Are Social Enterprises Efficient? A Theoretical Approach

Tobias Beckmann

Economic Papers, 2018, vol. 37, issue 4, 374-389

Abstract: Social enterprises are increasingly being used to distribute income to disadvantaged groups. However, a lack of consensus of what a social enterprise is has prevented researchers from assessing their relative allocative efficiency. I address this gap by extending the standard microeconomic model of a profit‐maximising firm to consider social enterprises as a Social Corporation (SC). I then analyse four types of SC, showing that three can be as allocatively efficient as a for‐profit firm in equilibrium, despite inputs not necessarily being paid their marginal benefit.

Date: 2018
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