Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103119
Authors: 
Perroni, Carlo
Pogrebna, Ganna
Sandford, Sarah
Scharf, Kimberley Ann
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 5024
Abstract: 
We study contestability in non-profit markets when non-commercial providers supply a homogeneous collective good through increasing-returns-to-scale technologies. Unlike in the case of for-profit competition, in the non-profit case the absence of price-based sales contracts means that fixed costs are directly relevant to donors, and that they can translate into an entry barrier, protecting the position of an inefficient incumbent; or that, conversely, they can make it possible for inefficient newcomers to contest the position of a more efficient incumbent. Evidence from laboratory experiments show that fixed cost driven trade-offs between payoff dominance and perceived risk can lead to inefficient selection.
Subjects: 
not-for-profit organizations
entry
core funding
JEL: 
L10
L30
D40
Document Type: 
Working Paper

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