Entry Thresholds and Competitive Behavior Among Nonprofit Firms

Posted by D. Daniel Sokol

Teresa D. Harrison, Drexel University - Department of Economics & International Business and Jeremy P. Thornton, Samford University - Brock School of Business describe Entry Thresholds and Competitive Behavior Among Nonprofit Firms.

ABSTRACT: This paper attempts to describe the competitive behavior of charitable non-profit firms when prices and output are difficult to observe. The paper exploits cross-sectional variation in market size to estimate the number of non-profits that can be supported within a market. We find that our sample markets generally reach competitive levels once three or more firms are observed. The results also demonstrate that entry thresholds have declined over time. The paper offers several possible interpretations of these findings and future directions for our research.