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FIRMS, NONPROFITS, AND COOPERATIVES: A THEORY OF ORGANIZATIONAL CHOICE
Author(s) -
HERBST Patrick,
PRÜFER Jens
Publication year - 2016
Publication title -
annals of public and cooperative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.526
H-Index - 37
eISSN - 1467-8292
pISSN - 1370-4788
DOI - 10.1111/apce.12130
Subject(s) - competition (biology) , business , industrial organization , profit (economics) , microeconomics , quality (philosophy) , organizational structure , marketing , economics , management , ecology , philosophy , epistemology , biology
We formalize the difference between profit‐maximizing firms, nonprofits, and cooperatives and identify optimal organizational choice in a model of quality provision. Firms provide lowest and nonprofits highest levels of quality. Efficiency, however, depends on the competitive environment, the decision making process among owners and technology. Firms are optimal when decision making costs are high. Else, firms are increasingly dominated by either nonprofits or cooperatives. Increased competition improves relative efficiency of firms and decreases relative efficiency of nonprofits.