Abstract
This paper investigates behavioural differences between non-profit organisations (NPOs), government organisations (GOs), and private market organisations (PMOs) as suppliers of nursery schools and retirement homes. On the basis of Weisbrod's undersupply model, the differentiated demand approach, and the public finance argument on the redistributive role of government, three hypotheses are theoretically specified and empirically tested: client differentiation; product differentiation; and price differentiation. NPOs and PMOs are shown to provide qualitatively better services and charge significantly higher prices than GOs. A clustering of clients with similar socio-economic backgrounds can be observed: GOs provide services for clients with lower economic and social status than private suppliers. GOs, holding more than two-thirds of the respective markets, are responsible for a ‘basic provision’ of services; they pursue distributional goals by producing services themselves; only rarely a ‘contracting out’ to private suppliers can be noted.
Similar content being viewed by others
References
Arrow, K.A. (1963) Uncertainty and the welfare economics of medical care,American Economic Review, 53, 941–73.
Badelt, C. (1985)Politische Ökonomie der Freiwilligenarbeit, Theoretische Grundlegung und Anwendungen in der Sozialpolitik, Campus, Frankfurt and New York.
Badelt, C. (1989) Government versus private provision of social services: the case of Austria, in E. James (ed.)The Nonprofit Sector in International Perspective, Oxford University Press, New York and Oxford.
Badelt, C. and Weiss P. (1990) Specialization, product differentiation and ownership structure in personal social services: the case of nursery schools,Kyklos, Fasc. 1, 61–81.
Buchanan, J. (1965) An economic theory of clubs,Economica, 72, 1–14.
Buchanan, J. (1968)The Demand and Supply of Public Goods, Rand McNally, Chicago.
Gretschmann, K. (1981)Steuerungsprobleme der Staatswirtschaft, Duncker und Humblot, Berlin.
Hansmann, H. (1980) The role of nonprofit enterprise,Yale Law Journal, April, 835–98.
Hansmann, H. (1987) Economic theory of nonprofit organizations, in W. Powell (ed.)Between the Public and the Private: The Nonprofit Sector, Yale University Press, New Haven.
James, E. (1987a) The nonprofit sector in comparative perspective, in W. Powell (ed.)Between the Public and the Private: The Nonprofit Sector, Yale University Press, New Haven
James, E. (1987b)Institutional Choice in the Education Industry: Modern and Developing Countries Compared, Paper Presented at the International Workshop on The Economics of Institutional Choice and Design, June, Vienna.
Kaniak, J. (1983)Theorie und Methode zur Abgrenzung peripherer Gebiete und zur Messung des regionalen Entwicklungsstandes in Österreich 1961–1973, IIR-Forschung, Wirtschaftsuniversität, Vienna.
Knapp, M. (1977)An Empirical Production Function for Old People's Homes: A Survey of Alternative Functional Forms and Some Preliminary Estimates, Discussion Paper, Personal Social Services Research Unit, University of Kent at Canterbury.
Matzner, E. (1982)Der Wohlfahrtsstaat von Morgen, Bundesverlag, Vienna.
McKay, N.L. (1988) Cost and scale economies in the nursing home industry,Journal of Human Resources, 23:1 (Winter).
Musgrave, R.A. (1959)The Theory of Public Finance, MacGraw Hill, New York.
ÖKSA (Österreichisches Komitee für Sozialarbeit) (1987)Betreute Wohnmöglichkeiten für Alte Menschen in Österreich, 1983 plus Update 1987.
Salamon, L. (1987) Of market failure, voluntary failure, and third-party government: toward a theory of government-nonprofit relations in the modern welfare state,Journal of Voluntary Action Research, 16:2.
Tuckman, H.P. and Chang, C.F. (1988) Cost convergence between for-profit and not-for-profit nursing homes: does competition matter?,Quarterly Review of Economics and Business, 28:4 (Winter).
Weisbrod, B.A. (1974) Toward a theory of the voluntary nonprofit sector in a three sector economy, in E.S. Phelps (ed.)Altruism, Morality and Economic Theory, Russell Sage, New York.
Weisbrod, B.A. (1988)The Nonprofit Economy, Harvard University Press, Cambridge, Mass.
Additional information
Christoph Badelt and Peter Weiss are both in the Department of Economics, Vienna University of Economics and Business Administration, Vienna, Austria.
Financial support from the Research Foundation of the Austrian National Bank (Jubiläumsfondsprojekt no. 2814) is gratefully acknowledged. The authors wish to thank Helmut Anheier, Henry Hansmann and Burton Weisbrod for valuable comments on an earlier draft, which was presented to the International Conference on ‘Voluntarism, Non-government Organisations and Public Policy’, Jerusalem, May 1989. The usual caveat applies.
Rights and permissions
About this article
Cite this article
Badelt, C., Weiss, P. Non-profit, for-profit and government organisations in social service provision: comparison of behavioural patterns for Austria. Voluntas 1, 77–96 (1990). https://doi.org/10.1007/BF01398493
Issue Date:
DOI: https://doi.org/10.1007/BF01398493