Search

Club goods with information asymmetry are frequently provided through mixed economies of for-profit, nonprofit, and public providers. Theory explaining mixed economies relies on sector to classify providers based on assumptions that sector-level differences in how organizations either distribute or reinvest profit will affect behavior. However, this classification is overly broad and is not able to adequately capture the diversity of providers of these types of goods. The author utilizes the Institutional Analysis and Development framework to identify six 'governance structures' in the for-profit and nonprofit sectors. Governance structures are constitutional-choice level rule variations in who has the power to make rules. I argue that there are two types of power that affect rules: (1) concentration of constitutional-choice level decision-making power (i.e., how many principals) and (2) proximity of monitoring and enforcement of those rules. The extent to which the constitutional rules actually guide service delivery outcomes depends on a nested rule environment. Only if there is consistency across three level of rules (constitutional, collective, and operational) can we connect sector to outcomes. The empirical reality of service delivery, particularly for club goods with information asymmetry, is far too complex for simplistic assumptions linking profit distribution or its reinvestment to outcomes. This article directs further research toward building contingent theory, with if/then conditions, based on empirical research. KEY WORDS: club goods, nonprofit, mixed economies, child care, institutional analysis, governance structures, Introduction The Institutional Analysis and Development (IAD) framework developed by Elinor Ostrom and colleagues at the Workshop for Political Theory and Policy Analysis at Indiana University provides a framework for [...]