Nonprofits supply many tax-financed services like healthcare and education. Yet nonprofits are absent from the canonical property rights theory of ownership. Extending the government “make or buy” decision to nonprofits and ex post frictions based on contracts as reference points suggests that contracting out to a nonprofit can be optimal when “mission” alignment credibly signals adherence to the spirit and not just the letter of the contract in unforeseen contingencies. The model sheds light on differential nonprofit presence across the spectrum of basic services, as illustrated by an application to the health sector.

We study two interventions in Beijing, China, that provide patients with information on antibiotic resistance via text message to discourage the overuse of antibiotics. The messages were sent once a month for five months. One intervention emphasizes the threat to the recipient’s own health and is found to have negligible effects. The other intervention, which highlights the overall threat to society, reduces antibiotics purchases by 17% in dosage without discouraging healthcare visits and other medicine purchases. The results demonstrate that prosocial messaging can have the potential to address public health issues that require collective action.

Keywords: Social-regarding message; Antibiotics; Field experiment

JEL codes: C93, D83, I12

Published: https://doi.org/10.1016/j.jdeveco.2023.103056