In this paper we show how ownership of the firm by its customers, as well as nonprofit status, can prevent the firm from exploiting consumer biases. By eliminating an outside residual claimant with control over the firm, these alternatives to investor ownership reduce the incentive of the firm...

For-profit hospitals in California contract out to a much greater extent than either public hospitals or private nonprofit hospitals. To explain why, we build a model in which the outsourcing decision is a trade-off between net revenues and “quality", any factor of interest to the hospital...