Competition in the Regulated Religious Market

Abstract

The religious market is considered as partially regulated, which means that the state does not prevent the emergence of sects as well as does not persecute non-religious people, and they exist along with the official denominations. A modification of the Hotelling’s spatial model is used in the paper under the simplifying assumption that the entry costs in the religious market are negligible. In contrast to the existing models, where agents seek the closest denominations in terms of strictness, the capacity of the existing churches is also taken into account. This capacity directly affects religious capital acquisition. It was shown by Michael McBride that in an unregulated market there is a natural bound for the number of churches. The authors show that such a bound does not exist in the modified model - moreover, sects and non-religious communities will arise. If the society moderately values the religious capital, then the denominations that arise will be significantly diverse. At the same time the entry costs may hinder the birth of some denominations. Although the majority of results are proven under the condition of a uniform density of preferred strictness among the agents, it is shown that when the monopoly denomination lowers its strictness under the shift in religious preferences, the number of non-religious agents will increase nonetheless, compared with the status quo.