Rational Nonprofit Entrepreneurship

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Abstract
This paper models nonprofit entrepreneurship as the equilibrium outcome of a multistage game among individuals who would like a public good to be provided.. The model predicts that if individuals will voluntarily contribute towards provision of the public good, then it is in the private interest of the entrepreneur to impose a non-distribution constraint on himself by founding a nonprofit firm. This decision also improves the allocation of resources, in the sense that it results in greater voluntary contributions than if the firm that provides the public good is proprietary.
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