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Papers by Claudio Balestri

Journal of Political Power, 2023

These notes offer an unusual perspective on democracy by interpreting key categories of political... more These notes offer an unusual perspective on democracy by interpreting key categories of political science through the lens of economics, specifically drawing from the 'theory of the firm' literature. Due to incomplete contracts, political power is conceptualized as a variable quantum that balances power resources with constitutional and electoral constraints. Accordingly, the proposed model is used to explain how the amount of power can vary over time, what its determinants are, and what mechanisms can lead to political regime change in an era of world polarized by democracies and autocracies.

Voluntary Sector Review, 2023

While the main economic theories regarding the third sector argue that nonprofit organisations ar... more While the main economic theories regarding the third sector argue that nonprofit organisations arise as institutional solutions to government and market failures, their role in influencing public and market outcomes are far less explored in economic research. This gap can be filled by borrowing from the social capital literature that provides a more highly integrated vision of the relationship among the three sectors. From this overturned perspective, the paper suggests an embedded theory of democracy in which civil society organisations play a crucial role in making democratic institutions work, by shaping social relations among citizens through equal and inclusive membership structures.

The Foundation Review, 2018

Foundations are commonly recognized as having a comparative advantage in supporting forward-looki... more Foundations are commonly recognized as having a comparative advantage in supporting forward-looking projects and programs. In this sense, the long term represents the natural horizon in which the foundations are called to fulfill their mission to plan and develop philanthropic activities and, therefore, the time reference for assessing results.

When a mission is focused more on improving the quality of life in a specific community than on addressing a specific social problem, evaluation of outcomes becomes more challenging. While available methods can provide valuable support to measuring the impact of a foundation’s specific program, they are unlikely to provide an overview of the outcomes of a multitude of projects financed over time.

This article presents the case of an Italian foundation committed to developing a tailored approach to evaluating the durable benefits of its local philanthropic activity.

Public Organization Review, 14 (2), 187-199, doi 10.1007/s11115-012-0214-7, Jun 2014

Going beyond the deeply examined non-distribution constraint, which refers to the right to residu... more Going beyond the deeply examined non-distribution constraint, which refers to the right to residual income, the paper investigates the other side of ownership, i.e. the right to residual control, to discover a general economic rationale for what we call “democracy”: a collective decision-making method based on the principles of equality and inclusiveness. The main result of the analysis is to point to the concept of perfect democracy as an efficient solution for the provision of public goods where other allocative mechanisms, such as the marketplace, fail.

Public Organization Review, 14(4), 533-543, doi 10.1007/s11115-013-0243-x, Dec 1, 2014

The paper starts with a theoretical reinterpretation of some classical topics in the public choic... more The paper starts with a theoretical reinterpretation of some classical topics in the public choice literature, where specific elements of contract theory and the theory of the firm are introduced. By putting into contact these completely different fields of economics, it defines a general theoretical framework for political behaviors whose implications go beyond those determined by the standard self-interest assumption. Political organizations, as suppliers of public policies, are supposed to maximize a residual quantum consisting in the public authority that can actually be exercised after all the electoral commitments, with voters and interests groups, have been fulfilled. This residual right—which can be seen also as a degree of discretion necessary for ruling parties to deal with unforeseen contingencies—is based on the reputational capital (goodwill) accumulated over time by political organizations and represents the intangible asset that secures voters’ loyalty and, consequently, the legitimacy to exercise public authority in the long run. When a deficit of goodwill occurs, a chain of “exit” strategies by voters can lead to undesirable results unless an effective “voice” option for citizens exists.

Public Organization Review, Jan 22, 2015

A classic argument in economic theory is that in a world of zero transaction costs the free barga... more 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 exchanges, political exchanges have been widely criticized on ethical grounds. Going beyond the well-known moral criticism regarding the exchange of votes, the paper attempts to demonstrate how in politics, ethics and economics can go hand in hand. Specifically, it proposes an unusual perspective on transaction costs, by arguing that the enhancement of such costs can be required to achieve efficient results in specific circumstances, where the free bargaining among parties conflicts with the public issue to be addressed. This suggests the basic idea that, while in markets transaction costs should be reduced, in politics, they may require to be enhanced.

Studi e Note di Economia, 16(2), 229-248, Aug 2011

Integrating many different elements from the main theories about nonprofit organizations, we defi... more 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 markets for goods and services characterized by a public good element. Also on the basis of legal rules and common practices easily identifiable in the third sector, we define nonprofit as firms whose ownership does not entail rights to returns, and property rights are "non-excludable" and "equally distributed". We demonstrate that, with owners characterized by social preferences, nonprofit firms achieve efficient results, providing higher levels of goods and services that forprofit firms would produce at a sub-optimal level, due to positive externalities involved. The revealed complementarities between nonprofit property rights structure and the nature of the goods provided, represent an innovation in the existing theories and permit to explain why nonprofit organizations tend to emerge in clearly defined fields of activities.

Areté, Quadrimestrale dell'Agenzia per le ONLUS, Apr 2011

Per indicare l'insieme di organizzazioni che non appartengono alla sfera pubblica e si differenzi... more Per indicare l'insieme di organizzazioni che non appartengono alla sfera pubblica e si differenziano, al tempo stesso, dalle imprese tradizionali, si fa spesso riferimento a termini quali settore non profit o ancora Terzo settore. Tali espressioni rimandano ad una concezione residuale del fenomeno e rivelano, probabilmente, l'assenza di una definizione chiara dello stesso. In particolare, per distinguere le organizzazioni non profit dalle imprese lucrative, si chiamano in causa criteri non sempre omogenei e condivisi quali, ad esempio, le caratteristiche dell'attività svolta dall'ente o le finalità perseguite dai soci. Nonostante la pertinenza di entrambi gli aspetti, in questa sede si sosterrà che l'elemento qualificante del non profit sia da rintracciarsi non tanto negli elementi sopra richiamati, quanto piuttosto nel sistema di regole che ne definiscono la struttura dei diritti di proprietà.

Conference Presentations by Claudio Balestri

Existing main economic theories suggest that nonprofits organization arise as institutional solut... more Existing main economic theories suggest that nonprofits organization arise as institutional solutions to market and government failures. A first body of theories emphasizes the tasks which nonprofit organizations can perform better than for-profit ones. According to nonprofit firms arise in sectors where it is difficult for the purchaser to evaluate the good or service sold. In his analysis these kinds of firm arise as a result of the non distribution constraint which acts as a signal to assure people that quality will not be sacrificed for private monetary gain. Ben Ner, Von Hoomissen (1993) also base their analysis on market failure, emphasizing the institutional benefits of nonprofit organizations. In addition to the non-distribution constraint, they consider other aspects, including the lack of ownership shares as a device adopted by founders to ensure the maintenance of stakeholder control, by preventing the concentration of control and rights to returns.