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Information, competition, and the quality of charities

Author

Listed:
  • 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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    References listed on IDEAS

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    1. Krasteva, Silvana & Yildirim, Huseyin, 2013. "(Un)Informed charitable giving," Journal of Public Economics, Elsevier, vol. 106(C), pages 14-26.
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    More about this item

    Keywords

    Informed giving; Quality of charity; Competition; All-pay auctions;

    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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