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Quality, reputation and the choice of organizational form
[journal article]
Abstract "This paper revisits the hypothesis that nonprofit organizations emerge in markets that are characterized by contractual incompleteness because they ensure consumers against opportunistic behavior. We extend the Glaeser and Shleifer (2001) framework which studies an entrepreneur's optimal choice of ... view more
"This paper revisits the hypothesis that nonprofit organizations emerge in markets that are characterized by contractual incompleteness because they ensure consumers against opportunistic behavior. We extend the Glaeser and Shleifer (2001) framework which studies an entrepreneur's optimal choice of organizational form and service quality when quality is non-contractible into a repeated interaction setting. The main result is that when reputations can be sustained, then for-profit status is the preferred organizational form and high quality services are ensured. This finding suggests that existing explanations of nonprofit organizations that focus entirely on contractual imperfections in the producer/consumer relationship may be inadequate." [author's abstract]... view less
Keywords
reputation
Classification
Basic Research, General Concepts and History of Economics
Applied Psychology
Free Keywords
Nonprofit Status; Contractual Incompleteness
Document language
English
Publication Year
2009
Page/Pages
p. 515-527
Journal
Journal of Economic Behavior & Organization, 71 (2009) 2
DOI
https://doi.org/10.1016/j.jebo.2009.02.014
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)