Working Paper: NBER ID: w12132
Authors: Tomas J. Philipson; Richard A. Posner
Abstract: Despite the conceptual differences between for-profit and non-profit firms stressed in conventional economic analyses of the non-profit sector, U.S. antitrust law generally does not distinguish between these two organizational forms. This paper argues that the same incentives to restrain trade exist in the non-profit sector as in the for-profit sector. Altruistic firms benefit from exploiting market power, just as non-altruistic ones do, even when they would price below cost without regard to competition. Therefore, promoting competition is socially valuable regardless of the particular objectives of producers, and the fact that antitrust law does not distinguish between the two sectors is efficient.
Keywords: No keywords provided
JEL Codes: K2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Altruistic firms exploit market power (D26) | Inefficiencies that antitrust law aims to address (K21) |
| Incentives for nonprofits to restrain trade are comparable to those of for-profits (L39) | Both can engage in collusive behavior that harms competition (L12) |
| Promoting competition is beneficial for social welfare (L49) | Regardless of the firms' objectives (L21) |
| Nonprofit universities engaging in collusion (L39) | Potential for market power exploitation exists in the nonprofit sector (L39) |
| Statistical data on antitrust cases in healthcare industry (L44) | Significant proportion of cases involve nonprofit entities (L31) |
| Absence of a general antitrust exemption for nonprofits is justified (L44) | Same economic principles apply across both sectors (P19) |