Does Market Size Matter Also for Charities

We analyze implications of market size on market structure in the not-forprofit sector. We show that, while a standard model of oligopolistic competition between for-profits predicts a positive relationship between market size and firm size, an analogous model of not-for-profit competition predicts no such correlation. We then interrogate these predictions empirically by focusing on five charitable markets for local public goods. These findings both reject the applicability of the classic theories of oligopolistic competition between for-profit firms to the not-for-profit case and fail to reject the simple model proposed here.