An economic model of religious organization under oppressive regulation

This paper aims to explain the behavior of certain religious organizations in countries with severe regulation that limits the religious market, such as those under communist rule. Religious organizations in those countries sometimes choose to operate both legally and illegally. The model proposed here shows that such behavior may increase the consumer welfare of religionists compared to solely legal or illegal provision of religious services. It assumes that religious organizations maximize the consumer surplus of their adherents. The choice of a religious organization between legal and illegal provision of religious services depends on the costs of religious participation imposed by the government and the set-up costs of dual operation. As an illustration, the paper accounts for the different response of the Catholic Church to restrictions imposed by the communists in Poland and Czechoslovakia.