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Information, competition, and the quality of charities

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  • Krasteva, Silvana
  • Yildirim, Huseyin

Abstract

Drawing upon the all-pay auction literature, we propose a model of charity competition in which informed giving alone can account for the significant quality heterogeneity across similar charities. Our analysis identifies a negative effect of competition and a positive effect of informed giving on the equilibrium quality of charity. In particular, we show that as the number of charities grows, so does the percentage of charity scams, approaching one in the limit. In light of this and other results, we discuss the need for regulating nonprofit entry and conduct as well as promoting informed giving.

Suggested Citation

  • Krasteva, Silvana & Yildirim, Huseyin, 2016. "Information, competition, and the quality of charities," Journal of Public Economics, Elsevier, vol. 144(C), pages 64-77.
    • Handle: RePEc:eee:pubeco:v:144:y:2016:i:c:p:64-77
    DOI: 10.1016/j.jpubeco.2016.10.008
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    Cited by:

    1. Kopel, Michael & Marini, Marco A., 2022. "Mandatory disclosure of managerial contracts in NGOs," Journal of Economic Behavior & Organization, Elsevier, vol. 199(C), pages 65-85.
    2. Gani Aldashev & Esteban Jaimovich & Thierry Verdier, 2023. "The Dark Side of Transparency: Mission Variety and Industry Equilibrium in Decentralised Public Good Provision," The Economic Journal, Royal Economic Society, vol. 133(654), pages 2085-2109.
    3. Adena, Maja & Alizade, Jeyhun & Bohner, Frauke & Harke, Julian & Mesters, Fabio, 2019. "Quality certification for nonprofits, charitable giving, and donor's trust: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 75-100.
    4. Roman M. Sheremeta & Neslihan Uler, 2021. "The impact of taxes and wasteful government spending on giving," Experimental Economics, Springer;Economic Science Association, vol. 24(2), pages 355-386, June.
    5. Karlan, Dean & List, John A., 2020. "How can Bill and Melinda Gates increase other people's donations to fund public goods?," Journal of Public Economics, Elsevier, vol. 191(C).
    6. Stefano Barbieri, 2023. "Complementarity and information in collective action," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(1), pages 167-206, January.
    7. Eckel, Catherine & Guney, Begum & Uler, Neslihan, 2020. "Independent vs. Coordinated Fundraising: Understanding the Role of Information," European Economic Review, Elsevier, vol. 127(C).
    8. Cheng Peng & Hui Jiang & Tianyi Zhang, 2022. "Does the national risk of overseas investment affect the strategic innovation behavior of enterprises? Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1548-1565, July.
    9. Jan Schmitz, 2021. "Is Charitable Giving a Zero-Sum Game? The Effect of Competition Between Charities on Giving Behavior," Management Science, INFORMS, vol. 67(10), pages 6333-6349, October.

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    More about this item

    Keywords

    Informed giving; Quality of charity; Competition; All-pay auctions;
    All these keywords.

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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