A classic argument in economic theory is that in a world of zero transaction costs the free bargaining among parties spontaneously leads to an efficient allocation of resources. Attempts have been made by many economists to apply such an argument to the field of politics. In contrast to market...

Integrating many different elements from the main theories about nonprofit organizations, we define a model that leads to new results for the economic rationale of nonprofit firms. Specifically, we examine the conditions under which these firms can provide efficient levels of production in...