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When NGOs Go Global: Competition on International Markets for Development Donations

Author

Listed:
  • Gani Aldashev
  • Thierry Verdier

Abstract

Why many large non-governmental organizations (NGOs) are becoming multinational entities? What are the welfare implications of this integration of markets for development donations? To answer these questions, we build a simple two-country model with horizontally differentiated NGOs competing through fundraising effort. We find that NGOs become multinational if the economies of scale in fundraising are sufficiently large. In that case, national NGOs in the smaller country disappear, while some national NGOs remain in the larger country only if the difference in the countries' size is large enough. Social welfare is higher in the regime with multinationals than under autarky.

Suggested Citation

  • Gani Aldashev & Thierry Verdier, 2008. "When NGOs Go Global: Competition on International Markets for Development Donations," Carlo Alberto Notebooks 93, Collegio Carlo Alberto.
  • Handle: RePEc:cca:wpaper:93
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    References listed on IDEAS

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    1. Gene M. Grossman & Carl Shapiro, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Oxford University Press, vol. 51(1), pages 63-81.
    2. Anna Fruttero & Varun Gauri, 2005. "The Strategic Choices of NGOs: Location Decisions in Rural Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 41(5), pages 759-787.
    3. Barr, Abigail & Fafchamps, Marcel & Owens, Trudy, 2005. "The governance of non-governmental organizations in Uganda," World Development, Elsevier, vol. 33(4), pages 657-679, April.
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    5. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    6. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    7. James Andreoni & A. Abigail Payne, 2003. "Do Government Grants to Private Charities Crowd Out Giving or Fund-raising?," American Economic Review, American Economic Association, vol. 93(3), pages 792-812, June.
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    Citations

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    Cited by:

    1. Aldashev, Gani & Marini, Marco & Verdier, Thierry, 2010. "Brothers in Alms? Coordination between NGOs on Markets for Development Donations," CEPR Discussion Papers 8109, C.E.P.R. Discussion Papers.
    2. Sara Biancini & David Ettinger & Baptiste Venet, 2017. "Mission Drift in Microcredit and Microfinance Institution Incentives," Working Papers DT/2017/01, DIAL (Développement, Institutions et Mondialisation).
    3. Stefan Mann, 2016. "Governing complementary responsibility goods through hybrid systems in a globalizing world," Journal of Socio-Economics in Agriculture (Until 2015: Yearbook of Socioeconomics in Agriculture), Swiss Society for Agricultural Economics and Rural Sociology, vol. 9(1), pages 14-21.
    4. Lionel Fontagné & Michela Limardi, 2011. "The Outcome of NGOs' Activism in Developing Countries under Visibility Constraint," PSE Working Papers halshs-00630096, HAL.
    5. Gani Aldashev & Marco Marini & Thierry Verdier, 2017. "Samaritan Bundles: Inefficient Clustering in NGO Projects," Working Papers 6/17, Sapienza University of Rome, DISS.
    6. Aldashev, Gani & Marini, Marco & Verdier, Thierry, 2014. "Brothers in alms? Coordination between nonprofits on markets for donations," Journal of Public Economics, Elsevier, vol. 117(C), pages 182-200.
    7. Federica VIGANO & Andrea SALUSTRI, 2015. "Matching profit and Non-profit Needs: How NPOs and Cooperative Contribute to Growth in Time of Crisis. A Quantitative Approach," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(1), pages 157-178, March.
    8. repec:aeg:report:2014-2 is not listed on IDEAS
    9. Krautheim, Sebastian & Verdier, Thierry, 2016. "Offshoring with endogenous NGO activism," Journal of International Economics, Elsevier, vol. 101(C), pages 22-41.
    10. Anthony Heyes & Marcel Oestreich, 2017. "The Optimal NGO Chief: Strategic Delegation in Social Advocacy," Working Papers 1701, Brock University, Department of Economics.
    11. Philipp Herkenhoff & Sebastian Krautheim, 2018. "The International Organization of Production in the Regulatory Void," CESifo Working Paper Series 6922, CESifo Group Munich.
    12. Michela Limardi, 2011. "The Ambiguous Outcome of NGOs' Activism in Developing Countries," ERSA conference papers ersa11p555, European Regional Science Association.
    13. Lionel Fontagné & Michela Limardi, 2011. "The Outcome of NGOs' Activism in Developing Countries under Visibility Constraint," Working Papers halshs-00630096, HAL.
    14. Cecilia NAVARRA & Elena VALLINO, 2015. "Who Had the Idea to Build Up a Village Organization? Some Evidence from Senegal and Burkina Faso," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(1), pages 33-72, March.
    15. Gani Aldashev & Cecilia Navarra, 2017. "Development NGOs: Basic Facts," Working Papers ECARES ECARES 2017-36, ULB -- Universite Libre de Bruxelles.
    16. Krautheim, Sebastian & Verdier, Thierry, 2012. "Globalization, Credence Goods and International Civil Society," CEPR Discussion Papers 9232, C.E.P.R. Discussion Papers.
    17. repec:hal:cesptp:halshs-00630096 is not listed on IDEAS
    18. Cecilia NAVARRA & Elena VALLINO, 2015. "Who Had the Idea to Build Up a Village Organization? Some Evidence from Senegal and Burkina Faso," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(1), pages 33-72, March.
    19. Gani Aldashev & Michela Limardi & Thierry Verdier, 2013. "Watchdogs of the Invisible Hand: NGO Monitoring, Corporate Social Responsibility, and Industry Equilibrium," Working Papers 1404, University of Namur, Department of Economics.
    20. Aldashev, Gani & Limardi, Michela & Verdier, Thierry, 2015. "Watchdogs of the Invisible Hand: NGO monitoring and industry equilibrium," Journal of Development Economics, Elsevier, vol. 116(C), pages 28-42.
    21. Pierre-Guillaume Méon & Philip Verwimp, 2016. "Pro-social behavior after a disaster: parochial or universal? Evidence from a natural experiment in Belgium," Working Papers CEB 16-054, ULB -- Universite Libre de Bruxelles.

    More about this item

    Keywords

    non-governmental organizations; charitable giving; globalization; multinational firms;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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