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Economics of the NFP Enterprise
MNA 70110
Summer 2010
Instructor: Professor Barry Keating
Phone: 574-631-9127
E-Mail: keating.1@nd.edu
Office: 226 Mendoza College of Business
Textbook: Microeconomics for Public Managers
Barry Keating and Maryann Keating
ISBN: 978-1-4051-2543-7
Both students and managers of NFP enterprises need to understand the elements of the economist’s toolkit; this course provides an introduction to that set of tools. Conventional economic analysis and tools are amended to accommodate the special characteristics of the nonprofit marketplace. Traditional economic analysis is extended to nonprofit organizations. Nonprofit firms are both like and unlike private for-profit firms and public sector entities; this course concentrates on using economic analysis to understand the ways in which NFP enterprises make decisions about which goods and services to provide, how they allocate resources to provide them, how they decide to whom they should be made available, and how to finance these activities.
The course will include some in-class experiments. In most cases these are completed with the use of your wireless enabled laptop computers; you may pair with another student if you do not have a laptop.
Three elements of the course will be graded. First, your “pre-course assignments” will be handed in the first day of class (hardcopy, no electronic submission).
Second, chapter-end exercises will be assigned and selected exercises will be discussed in class. If you are assigned an exercise you are expected to have a typed answer ready to hand to the instructor and you are expected to be ready to lead a discussion of the exercise with the class.
Finally, there will be two examinations in this course. The shorter midterm examination will be on day five (Saturday of the first week - July 3rd) and will cover Chapters 1, 2, 3, 4, and 5. The final examination will be a full period examination on day nine (Thursday, July 8th); this second exam is a comprehensive exam.
The course grade will be computed in the following manner:
Chapter-end Exercises and Pre-class Exercise 30%
Midterm Examination: 40%
Final Examination 30%
The schedule of material covered (including exercises and applications capsules) will follow the calendar below:
Course Calendar
The following chapters should be read and the assigned problems completed before the class starts (this is the pre-course assignment):
PRE-COURSE ASSIGNMENT
-An Overview (Chapter 1- excluding the Appendix).
-Characteristics of the Nonprofit and Government Sectors (Chapter 2)
Assignment:
Exercise 2.4
Exercise 2.6
Exercise 2.9
Exercise 2.18
Exercise 2.20
WSJ Articles:
“A Government Safety Net Is Not Enough”- Does the de Tocqueville observation describe present U.S. household behavior?
“The Charity Revolt”- Describe the impact on the composition of public goods provided by nonprofits due to the differential effects of the deductibility of contributions from gross income in determining taxable income. Would these effects remain with a flat (proportional) tax?
The assignments listed above (hardcopy, no electronic submission) will be collected on the first day in class.
Monday, June 28th – (Class #1)
Theme: Public Goods
Lecture :
Appendix on Regression – Chapter 1
Chapter 2
Student Participation :
Exercise 2.4
Exercise 2.6
Exercise 2.9
Exercise 2.18
Exercise 2.20
Public Goods Experiment (Voluntary Contributions)
Key Concepts:
Regression Output
Figure 2.1
Tuesday, June 29th – (Class #2)
Theme: Supply and Demand – Chapter 3
Lecture:
Supply, Demand, Consumer and Producer Surplus, Price Controls, and the Demand for Public Goods
Student Participation:
Exercise 3.3
Exercise 3.4
Exercise 3.5
Exercise 3.6
Double Auction Experiment
Key Concepts:
Figure 3.3
Wednesday, June 30th – (Class #3)
Theme: Estimating Client Choice - Chapter 4
Lecture:
Indifference Curves, Elasticity, Tax Burdens, and Forecasting
Student Participation:
Exercise 4.1
Exercise 4.2
Exercise 4.3
Excise Tax Experiment
Thursday, July 1st – no class
Friday, July 2nd – (Class #4)
Theme: Market Failure and Public Choice – Chapter 5
Lecture:
Market Failure, Common Bond, Managerial Discretion, Public Choice, Arrow’s Impossibility.
Student Participation:
Exercise 5.8
Exercise 5.17
Volunteer's Dilemma Experiment
Key Concepts:
Figure 5.4
Saturday, July 3rd – (Class #5)
Midterm Examination: Chapters 1 through 5
Midterm Results
Theme: Production and Costs – Chapter 6
Lecture: Productivity, Fixed and Variable Costs, the Long Run, the Short Run, and MRP=MRC
Student Participation:
Exercise 6.1
Exercise 6.2
Exercise 6.3
Exercise 6.7
Exercise 6.8
Key Concepts:
Figure 6.10
WSJ Article:
“Pro Football’s College Tuition Bill”- How have professional sports’ organizations shifted training costs to the NFP sectors? Analyze how these costs are shifted between university stakeholders.
Sunday, July 4th – no class
Monday, July 5th – (Class #6)
Theme: Market Structure – Chapter 7
Lecture: Perfect Competition, Monopoly, Price Discrimination
Key Concepts:
Figure 7.5
Figure 7.8
Exercise 7.9
WSJ Articles:
“God Will Provide-Unless the Government Gets There First”- Comment on the positive and negative aspects of inter-sectoral competition with respect to the quality and quantity of public goods.
“Helping Themselves”- Comment on the positive and negative aspects of intra-sectoral competition with respect to the quality and quantity of public goods.
Tuesday, July 6th – (Class #7)
Theme: Selecting the Right Niche – Chapter 8
Lecture: Differentiation, Game Theory, Cost Plus Pricing
Student Participation:
Exercise 8.1
Game Theory Experiment
Key Concepts:
Figure 8.2
WSJ Article:
“Arts Organization on the Brink Are Turning to Him for Advice”- Interpret the McMillan Matrix in terms of Kaiser’s position on program cutting.
Wednesday, July 7th – (Class #8)
Theme: Strategic Goods – Chapter 9 and Cost Benefit Analysis – Chapter 11
Lecture: Favored, Neutral, and Preferred Output, Cross Subsidization, Contract Failure, Hansmann Criterion, Targets and Indicators
Student Participation:
Exercise 9.1
Exercise 11.1
Exercise 11.2
Key Concepts:
Goods
Cost Benefit Analysis
WSJ Articles:
“Giving Capitalism Its Due”- How important is it that we develop a coherent theory of a foundation’s role in society? To what extent, according to this article, do private nonprofits depend on an environment hospitable to entrepreneurship?
“Philanthropy and Its Enemies”- How will strategic goals and firm mission be affected if activists desire 1) to redistribute foundation wealth and 2) to determine board composition are achieved?
Thursday, July 8th – Final Examination
Final Examination (comprehensive, full period, written, in-class examination beginning at 1:00 pm).
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