Mixed Competition And Welfare Under Various Nonprofit Objectives Mixed Competition Under Various Cost Configurations

The author studies the competition between one nonprofit and one for-profit firm under various objective functions of the nonprofit firm. The two firms optimize their objectives with respect to quality and price of their products. The nonprofit firm serves one-half of the market under pure quality maximization, while it serves about two-thirds under two other objective functions that in addition to quality, include market share. In contrast, the market share and profit of the for-profit firm decrease, and consumer and total surplus increase.