International Journal of Business and Economics Volume 1, No. 3 December, 2002

Competition between Nonprofit and For-Profit Firms

Donald Lien

Department of Economics, University of Texas at San Antonio, U.S.A.

Abstract

This paper considers a nonprofit firm competing against a for-profit firm in a homogenous goods market. Given a stochastic demand function and an asymmetric tax schedule, we derive Cournot-Nash equilibrium allowing the nonprofit firm to have an altruistic preference toward consumer surplus or total surplus. The effects of the tax rate and the degree of altruistic preference on market equilibrium outcomes are analyzed thereof.

Keywords：nonprofit, asymmetric taxation, stochastic demand, Cournot-Nash equilibrium.

JEL Classifications：L2, L3.

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