International Charity: For the Poor?
We show how international charity leads to reduced self-help, exacerbated internal income inequality, and less charity for needy countries when international funds transfer is costly and there are information asymmetries. Mechanism design techniques are used to analyze international income transfer programs in the context of moral hazard, principal-agent, and adverse selection problems. We show that the burden of information asymmetry is borne by the most needy even when charities design incentive contracts which limit informational rents.
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|Date of creation:||01 Jul 2002|
|Date of revision:|
|Publication status:||Published in Economic Inquiry, July 2002, vol. 40 no. 3, pp. 497-507|
|Contact details of provider:|| Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070|
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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