Fundraising and optimal policy rules
AbstractThis paper develops a simple spatial model of fundraising, in which charities select a target population to solicit donations. First, we show that in a competitive charity market without any intervention, the number of charities in the market and/or the overall net funds raised by charities may be sub-optimal. Next, we analyze whether a social planner can prevent such shortcomings and show that a regulatory mechanism can be designed to achieve socially desirable outcomes. In contrast to the previous literature, our model does not necessarily produce monopoly as the optimal market structure. We show that if fixed costs associated with establishing charities are sufficiently low, then the optimal market structure is not a monopoly. Given the importance of the trade-off between the volume and variety of charitable services, we argue that this result may be of particular interest to policy makers.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 18312.
Date of creation: 29 Nov 2009
Date of revision:
fundraising; social planner; regulatory policy;
Other versions of this item:
- L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Charities: competition vs. the social planner
by Economic Logician in Economic Logic on 2010-01-04 18:09:00
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