Public Policy and the Performance of Nonprofit Organizations: A General Framework

This article discusses various attempts by economists to model the behavior and performance of nonprofit organizations, and it provides four desiderata of a model suitable for policy analysis: the legal definitions of nonprofit status must be incorporated into the model; the objective function must emerge from the regulatory and competitive environment; the emergence of competitors (for-profit, nonprofit, and governmental) must be endogenous; and the information structure must be fully specified and self-consistent. The article discusses how to incorporate each of these desiderata into a model.

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