WP-02-26

Jeffrey P. Ballou

Abstract

Whether consumers perceive for-profit, nonprofit, and government outputs to be perfect substitutes has implications for understanding the social value of nonprofit and governmental producers in the marketplace. While theoretical arguments have been made in support of and against the existence of ownership effects, little empirical research has been conducted to measure their presence. This study examines data from the Wisconsin nursing home industry from 1984 through 1995 and concludes that ownership effects exist, with consumers indicating the greatest preference for nonprofit homes and the least preference for government homes, ceteris paribus. This result is robust to different specifications.

Jeffrey P. Ballou, Department of Economics, Northwestern University

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