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Fundraising and Optimal Policy Rules

Author

Listed:
  • MURAT C. MUNGAN
  • BARIŞ K. YÖRÜK

Abstract

This 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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Suggested Citation

  • Murat C. Mungan & Bariş K. Yörük, 2012. "Fundraising and Optimal Policy Rules," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(4), pages 625-652, August.
    • Handle: RePEc:bla:jpbect:v:14:y:2012:i:4:p:625-652
    DOI: j.1467-9779.2012.01555.x
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    File URL: http://hdl.handle.net/10.1111/j.1467-9779.2012.01555.x
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Charities: competition vs. the social planner
      by Economic Logician in Economic Logic on 2010-01-05 00:09:00

    Citations

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    Cited by:

    1. Eckel, Catherine & Guney, Begum & Uler, Neslihan, 2020. "Independent vs. Coordinated Fundraising: Understanding the Role of Information," European Economic Review, Elsevier, vol. 127(C).
    2. Kevin C. Corinth, 2016. "A price theory of altruistic identity," AEI Economics Working Papers 901391, American Enterprise Institute.
    3. Yörük, Barış K., 2025. "Does local diversity affect charitable giving?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 119(C).
    4. Crettez, Bertrand & Hayek, Naila & Zaccour, Georges, 2020. "Do charities spend more on their social programs when they cooperate than when they compete?," European Journal of Operational Research, Elsevier, vol. 283(3), pages 1055-1063.
    5. Gayle, Philip, 2024. "Do Nonprofits Engage in Excessive Fundraising?," MPRA Paper 120684, University Library of Munich, Germany.
    6. Barış K. Yörük, 2016. "Charity Ratings," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(1), pages 195-219, March.

    More about this item

    JEL classification:

    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy

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