Fundraising and optimal policy rules

Murat Mungan and Barış Yörük

MPRA Paper from University Library of Munich, Germany

Abstract: This paper develops a simple spatial model of fundraising, in which charities select a target population to solicit donations. First, we show that in a competitive charity market without any intervention, the number of charities in the market and/or the overall net funds raised by charities may be sub-optimal. Next, we analyze whether a social planner can prevent such shortcomings and show that a regulatory mechanism can be designed to achieve socially desirable outcomes. In contrast to the previous literature, our model does not necessarily produce monopoly as the optimal market structure. We show that if fixed costs associated with establishing charities are sufficiently low, then the optimal market structure is not a monopoly. Given the importance of the trade-off between the volume and variety of charitable services, we argue that this result may be of particular interest to policy makers.

Keywords: fundraising; social planner; regulatory policy (search for similar items in EconPapers)
JEL-codes: L38 (search for similar items in EconPapers)
Date: 2009-11-29
New Economics Papers: this item is included in nep-reg
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https://mpra.ub.uni-muenchen.de/18312/1/MPRA_paper_18312.pdf original version (application/pdf)

Related works:
Journal Article: Fundraising and Optimal Policy Rules (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:18312

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