TY  - JOUR
AU  - Glaeser,Edward L.
AU  - Shleifer,Andrei
TI  - Not-For-Profit Entrepreneurs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6810
PY  - 1998
Y2  - November 1998
UR  - http://www.nber.org/papers/w6810
L1  - http://www.nber.org/papers/w6810.pdf
N1  - Author contact info:
Edward L. Glaeser
Department of Economics
315A Littauer Center
Harvard University
Cambridge, MA 02138
Tel: 617/495-0575
Fax: 617/495-7730
E-Mail: eglaeser@harvard.edu

Andrei Shleifer
Department of Economics
Harvard University
Littauer Center M-9
Cambridge, MA 02138
Tel: 617/495-5046
Fax: 617/496-1708
E-Mail: ashleifer@harvard.edu
AB  - Entrepreneurs who start new firms may choose not-for-profit status as a means of committing to soft incentives.  Such incentives protect donors, volunteers, consumers and employees from ex post expropriation of profits by the entrepreneur.  We derive conditions under which completely self-interested entrepreneurs opt for not-for-profit status, despite the fact that this status limits their ability to enjoy the profits of their enterprises.  When entrepreneurs have a taste for producing high quality products, the incentives are even softer, and, moreover, non-profit status can serve as a signal of that taste. We also show that even in the absence of tax advantages, unrestricted donations would flow to non-profits rather than for-profit firms because donations have more significant influence on the decisions of the non-profits.
ER  -