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Entry, donor market size, and competitive conduct among nonprofit firms

Philip Gayle (), Teresa Harrison and Jeremy Thornton ()

International Journal of Industrial Organization, 2017, vol. 50, issue C, 294-318

Abstract: This paper empirically characterizes competitive behavior among charitable nonprofits where prices and output are difficult to observe. Using a model tailored to donative nonprofits and an empirical methodology that exploits cross-sectional variation in market size and various measurable demographic and cost characteristics applicable for nonprofits, this paper estimates the threshold number of potential donors required for nonprofit economic viability in five major charitable sectors. We find that our sample markets generally reach competitive levels once five or more nonprofits in a given nonprofit sector are observed. The paper offers several possible interpretations of these findings and directions for future research.

Keywords: Nonprofit; Competition; Donative firms; Entry thresholds (search for similar items in EconPapers)
JEL-codes: L30 L13 C25 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.ijindorg.2016.10.003

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Handle: RePEc:eee:indorg:v:50:y:2017:i:c:p:294-318