TY - JOUR
T1 - Nonprofits with distributional objectives
T2 - Price discrimination and corner solutions
AU - Steinberg, Richard
AU - Weisbrod, Burton A.
N1 - Funding Information:
Research was supported by grants from the Andrew W. Mellon Foundation, the Robert Wood Johnson Foundation Investigator Awards Program, and Atlantic Philanthropies (to Weisbrod) and the Indiana University Center on Philanthropy (to Steinberg). Thanks to Marc Bilodeau, Partha Deb, Don Kenkel, Bruce Kingma, Una Okonkwo Osili, Peter Rangazas, Steve Russell, Robert Sandy, Lise Vesterlund, Mark Wilhelm, anonymous referees, and participants in a seminar at Vanderbilt University. Although the concepts expressed in this paper represent the joint work of the two coauthors, Steinberg served as the primary author for the mathematical representation of these concepts.
PY - 2005/12
Y1 - 2005/12
N2 - We characterize the patterns of pricing and rationing when paternalistic nonprofit organizations (either private or governmental) care about the level and distribution of consumer surplus provided to their clients. Equilibrium depends upon marginal cost, the organization's distributional weights, exogenous income levels, and cream-skimming by competing for-profit firms. In equilibrium, some consumers pay their reservation price or a lower price above marginal cost, some pay less than marginal cost, some obtain the good for free, and some are not permitted to buy the good at any acceptable price. Comparative statics here differs from that for output or profit maximizers, with discontinuous price schedules shifting abruptly when exogenous income changes.
AB - We characterize the patterns of pricing and rationing when paternalistic nonprofit organizations (either private or governmental) care about the level and distribution of consumer surplus provided to their clients. Equilibrium depends upon marginal cost, the organization's distributional weights, exogenous income levels, and cream-skimming by competing for-profit firms. In equilibrium, some consumers pay their reservation price or a lower price above marginal cost, some pay less than marginal cost, some obtain the good for free, and some are not permitted to buy the good at any acceptable price. Comparative statics here differs from that for output or profit maximizers, with discontinuous price schedules shifting abruptly when exogenous income changes.
KW - Distributional weights
KW - Nonprofit organization
KW - Price discrimination
KW - Public pricing
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U2 - 10.1016/j.jpubeco.2004.08.006
DO - 10.1016/j.jpubeco.2004.08.006
M3 - Article
AN - SCOPUS:27744511437
SN - 0047-2727
VL - 89
SP - 2205
EP - 2230
JO - Journal of Public Economics
JF - Journal of Public Economics
IS - 11-12
ER -