Citation Herbst P & Prufer J (2016) Firms, Nonprofits, and Cooperatives: A Theory of Organizational Choice. Annals of Public and Cooperative Economics, 87 (3), pp. 315-343. https://doi.org/10.1111/apce.12130
Abstract 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.
Keywords Theory of the Firm; Nonprofits; Cooperatives; Organizational Choice;
Journal Annals of Public and Cooperative Economics: Volume 87, Issue 3