Competition and Performance in the Marketplace for Religion: A Theoretical Perspective

Abstract

This paper, which contributes to the literature that rigorously models religious markets, offers a theoretical framework that incorporates demand and supply sides. The model can accommodate Adam Smith's view that competition may possibly improve on monopoly's performance and also David Hume's opposite view that, because the clergy have an incentive to distort the message of religion, monopoly might possibly improve on competition. Impacts on religiosity of greater diversity and of increased competition in the marketplace for religion are isolated. It is shown that while greater diversity benefits the devout (as claimed by "supply-side" theorists), increased competition dilutes spiritual standards by encouraging monetary donations at the expense of genuine piety. These opposing effects of diversity and competition help reconcile apparently contradictory empirical findings on the American religious market and also those suggesting European "exceptionalism."

Competition Between Exclusive Religions: The Counter‐Reformation As Entry Deterrence

“…The key analytical difference is that the improvement in product quality (which was real enough) was matched not by lower but by higher membership price: customers were to receive more and hence could and should pay more, though not in monetary terms. Borrowing Eswaran's () distinction, Counter‐Reformation policies promoted piety rather than donations.…”

Rethinking the Study of Religious Markets

“…As in Montgomery, the small amount of formal work in this area often begins with a model of spatial competition. But even if one attempts to use such a model assuming certain objective functions, the results often produce multiple equilibria with ambiguous comparative statics (McBride, forthcoming; Barros and Garoupa, 2002;Pautvaara and Wagener, 2004;Eswaran, 2009). 5…”

“…This point is considered at some length, and with some creativity, in a paper byEswaran (2009); readers interested in this topic should consult his paper. 5 Some sociologists have also questioned whether the "traditional" sociology story is in fact as clear as it seems to be; seePhillips (2004).…”

Substitution and Stigma: Evidence on Religious Competition from the Catholic Sex-Abuse Scandal

“…Several studies, including Iannaccone, Finke, and Stark (1997) and Hungerman (2010) have proposed 6 Examples include McBride (2010), Montgomery (2003), Gruber (2005), Eswaran (2009), North and Staha (2004), Trawick and Lile (2007), Perl and Olson (2000), Zaleski and Zech (1995), Finke, Guest, and Stark (1996), Stark and Iannaccone (1994), Hamberg and Pettersson (1994), Feldman and Ruffle (2008), Borgonovi (2008), Bruce (1992), Breault (1989a, b), Olson (1999), Olson and Hadaway (1999), McCleary and Barro (2006), Goff and Trawick (2008), and Chaves and Cann (1992). 7 A much-noted paper by Voas, Crockett, and Olson (2002) also criticizes empirical work in this area.…”

“…Indeed, even critics of the spiritual capital model often accept the premise of similarity in substitution while disputing the model's ability to explain such behavior, e.g., Bruce (2010). 9 The results may also inform work modeling religious competition as spatial competition (Iyer, Velu, Xue, and Chakravarty, 2010;McBride, 2008 andBarros and Garoupa, 2002;Eswaran, 2009). Such models have proven useful for studying religious markets, but these models would typically depict Catholic adherents-those who are spatially grouped "near" the Catholic Church-as having similar tastes for a religious commodity, which would again suggest that those substituting away from a common faith would make relatively homogeneous and non-radical substitutions.…”