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Goodwill bazaar: NGO competition and giving to development

Goodwill bazaar: NGO competition and giving to development
Goodwill bazaar: NGO competition and giving to development
This paper builds a model of competition through fundraising between horizontally differentiated NGOs. NGOs allocate their time resource between working on the project and fundraising, which attracts private donations. If the market size is fixed, the fundraising levels increase with the number of NGOs and the free-entry equilibrium number of NGOs can be larger or smaller than the socially optimal number, depending on the efficiency of the fundraising technology. If the market size is endogenous and NGOs cooperate in attracting new donors, fundraising levels decrease with the number of NGOs and the free-entry equilibrium number of NGOs is smaller than the one that maximizes the welfare of donors and beneficiaries. If NGOs can divert funds for private use, multiple equilibria (with high diversion and no diversion of funds) appear.

ngos, monopolistic competition, giving, non-distribution constraint
0304-3878
48-63
Aldashev, Gany
b2d8b43b-9466-4f77-8856-299b13fce373
Verdier, Thierry
87c483ea-f473-408f-9776-d0381cab6454
Aldashev, Gany
b2d8b43b-9466-4f77-8856-299b13fce373
Verdier, Thierry
87c483ea-f473-408f-9776-d0381cab6454

Aldashev, Gany and Verdier, Thierry (2010) Goodwill bazaar: NGO competition and giving to development. Journal of Development Economics, 91 (1), 48-63. (doi:10.1016/j.jdeveco.2008.11.010).

Record type: Article

Abstract

This paper builds a model of competition through fundraising between horizontally differentiated NGOs. NGOs allocate their time resource between working on the project and fundraising, which attracts private donations. If the market size is fixed, the fundraising levels increase with the number of NGOs and the free-entry equilibrium number of NGOs can be larger or smaller than the socially optimal number, depending on the efficiency of the fundraising technology. If the market size is endogenous and NGOs cooperate in attracting new donors, fundraising levels decrease with the number of NGOs and the free-entry equilibrium number of NGOs is smaller than the one that maximizes the welfare of donors and beneficiaries. If NGOs can divert funds for private use, multiple equilibria (with high diversion and no diversion of funds) appear.

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More information

Published date: January 2010
Keywords: ngos, monopolistic competition, giving, non-distribution constraint

Identifiers

Local EPrints ID: 157429
URI: https://eprints.soton.ac.uk/id/eprint/157429
ISSN: 0304-3878
PURE UUID: 8d681777-fd41-4d00-be4f-93f0a4105b41

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Date deposited: 07 Jun 2010 11:01
Last modified: 16 Jul 2019 23:56

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Contributors

Author: Gany Aldashev
Author: Thierry Verdier

University divisions

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