Information, competition, and the quality of charities

Silvana Krasteva and Huseyin Yildirim

Journal of Public Economics, 2016, vol. 144, issue C, 64-77

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.

Keywords: Informed giving; Quality of charity; Competition; All-pay auctions (search for similar items in EconPapers)
JEL-codes: H00 H30 H50 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:144:y:2016:i:c:p:64-77

DOI: 10.1016/j.jpubeco.2016.10.008

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