Document Type

Article

Publication Date

7-2012

Publication Title

Journal of Public Economic Theory

Publication Title (Abbreviation)

J. Pub. Econ. Theory

Volume

14

First Page

625

Last Page

652

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-o¤ between the volume and variety of charitable services, we argue that this result may be of particular interest to policy makers.

DOI

10.1111/j.1467-9779.2012.01555.x

Rights

Authors' accepted manuscript, © 2011 Murat C. Mungan and Bariş K. Yörük

Comments

This is the author's accepted manuscript version. The version of record (© 2014 Elsevier) is available at http://onlinelibrary.wiley.com/enhanced/doi/10.1111/j.1467-9779.2012.01555.x/ or the DOI provided above.

Faculty Biography

http://law.fsu.edu/our-faculty/profiles/mungan

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