Agency Costs in Environmental Not-for-Profits

Julie A Hewitt and Daniel K Brown

Public Choice, 2000, vol. 103, issue 1-2, 163-83

Abstract: We examine the behavior of not-for-profits using utility maximization. This leads to testable hypotheses regarding the costs of agency associated with the activities of not-for-profits. Our tests are similar to those previously employed regarding not-for-profit objectives, but our interpretation is different. Our empirical test uses data on environmental groups. Unlike previous studies biased toward a finding of service maximization, we account for endogenous explanatory variables. A weak statement of our results is that managers of environmental groups derive positive marginal utility from expenditures for purposes other than providing services. There may also be empirical support for a stronger conclusion. Copyright 2000 by Kluwer Academic Publishers

Date: 2000
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