Nonmarket analysis refers to how we organize and draw inferences from the information we’ve assembled about the issue and for each stakeholder. Working in a structured manner, this analysis involves five fundamental steps. (You will address each of these step in your Case Study project throughout the semester)
- Define the issue. Remember from a previous page that "an issue is defined as a specific policy question with a uni-dimensional set of possible policy alternatives (outcomes)." Please keep this in the back of your mind, as you will be asked at various points in this course to identify issues. (For issue examples, see the Case Study options.)
- Collect background on issue. Document key terms and concepts, historical context, status and timeline.
- Identify and profile stakeholders. Name of stakeholder (firm, association, group or individual), type of organization and mission. Establish an initial position on the issue and explain benefits the stakeholder expects to realize from taking this position on this issue.
- Assess demand for and supply of non-market action across stakeholders. For each stakeholder, evaluate demand for nonmarket action (available substitutes, aggregate benefits, per capita benefits) and supply for nonmarket activities (effectiveness and cost of organizing).
- Predict the amount of nonmarket action that a stakeholder can be expected to take. This is established by weighing the demand (benefits) of taking action with the supply (resources required) to take action. The greater the benefits, the more likelihood of taking action. The greater the cost (and considering available resources), the less likelihood of taking action.
In the following lessons and accompanying case study, we will work through each step of nonmarket analysis and demonstrate a framework for organizing and presenting a nonmarket analysis summary.