Competition and Mergers Among Nonprofits

Posted by D. Daniel Sokol

Jens Prufer, TILEC and CentER, Department of Economics, Tilburg University has a paper on the very interesting topic of Competition and Mergers Among Nonprofits.

ABSTRACT: Should mergers among nonprofit organizations be assessed differently than mergers among for-profit firms? A recent debate in law and economics, boosted by apparently one-sided court decisions, has produced the result that promoting competition is socially valuable regardless of the particular objectives of producers. In this paper, I challenge the general validity of this result by showing that it may indeed depend on the particular objectives of producers whether a merger between two nonprofits is welfare decreasing or increasing. This implies that it is impossible to assess the net effects of a merger between two nonprofits without examining the objectives of the owners involved.