Fundraising and Optimal Policy Rules

14 Journal of Public Economic Theory, 625 (2012).

30 Pages Posted: 6 Apr 2011 Last revised: 8 Aug 2012

See all articles by Murat C. Mungan

Murat C. Mungan

George Mason University - Antonin Scalia Law School, Faculty

Barış K Yörük

Boston College - Department of Economics

Date Written: 2010

Abstract

This paper develops a simple spatial model of fund-raising, 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, Regulatory Policy

JEL Classification: H21, L31, L38

Suggested Citation

Mungan, Murat C. and Yörük, Barış K, Fundraising and Optimal Policy Rules (2010). 14 Journal of Public Economic Theory, 625 (2012).. Available at SSRN: https://ssrn.com/abstract=1803216

Murat C. Mungan (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Barış K Yörük

Boston College - Department of Economics ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

HOME PAGE: http://www2.bc.edu/~yoruk

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