This paper investigates behavioural differences between non-profit organisations (NPOs), government organisations (GOs), and private market organisations (PMOs) as suppliers of nursery schools and retirement homes. On the basis of Weisbrod's undersupply model, the differentiated demand approach, and the public finance argument on the redistributive role of government, three hypotheses are theoretically specified and empirically tested: chent differentiation; product differentiation; and price differentiation. NPOs and PMOs are shown to provide qualitatively better services and charge significantly higher prices than GOs. A clustering of clients with similar socio-economic backgrounds can be observed: GOs provide services for clients with lower economic and social status than private suppliers. GOs, holding more than two-thirds of the respective markets, are responsible for a 'basic provision' of services; they pursue distributional goals by producing services themselves; only rarely a 'contracting out' to private suppliers can be noted. This paper investigates behavioural differences between non-profit organisations (NPOs), government organisations (GOs) and private market organisations (PMOs) as suppliers of social services. The problem we. are raising is of both theoretical and political interest. From a theoretical standpoint differences in behaviour can be viewed as a test of the vahdity of theories of 'institutional choice' (see Weisbrod, 1988, p. 16ff) which provide a rationale for the existence of particular institutional types of providers of social services. Seen from a political angle, behavioural differences between NPOs, PMOs, and GOs may serve as a basis for the evaluation of alternative providers, which may have an impact on numerous decisions in social policy.The first section of this paper briefly reviews the main theoretical arguments on which predictions of behavioural differences between alter-