NGO Competition and the Markets for Development Donations

Thierry Verdier and Gani Aldashev

No 6350, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Is competition for donations between development NGOs good for welfare? We address this question in a monopolistic competition model à la Salop (1979). NGOs - defined by the non-distribution constraint - compete for donations from donors by exerting fundraising effort. If the market size is fixed, the free-entry equilibrium number of NGOs is usually larger than the optimal number. However, if the market size is endogenous and NGOs both compete and co-operate in attracting new donors, the free-entry equilibrium number of NGOs is generally smaller than the optimal number. If NGOs can divert a part of funds for private use, for a certain range of outside option of NGO entrepreneurs multiple equilibria (with high diversion and no diversion of funds) exist.

Keywords: Ngos; Monopolistic competition; Non-distribution constraint (search for similar items in EconPapers)
JEL-codes: D43 L13 L31 (search for similar items in EconPapers)
Date: 2007-06
New Economics Papers: this item is included in nep-com and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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