Specialization, Product Differentiation and Ownership Structure in Personal Social Services: The Case of Nursery Schools

Abstract

This paper compares alternative institutional providers of social services (private market organizations, government organizations, and nonprofit organizations). The empirical evidence is based on data from the Austrian nursery school industry and indicates substantial differences in supply behavior. Private market organizations have been found to specialize in low-cost market segments and in segments allowing for economies of scope. Nonprofit organizations do not follow the same cost minimizing strategies if their ideological goals are contradicted. Furthermore, it is shown that private market organizations react strongly to market conditions and consumer needs, while the supply of government organizations and nonprofit organizations is less affected by these factors. Copyright 1990 by WWZ and Helbing & Lichtenhahn Verlag AG