Inter-Charity Competition under Spatial Differentiation: Sorting, Crowding, and Spillovers

48 Pages Posted: 10 Oct 2019 Last revised: 14 Oct 2019

See all articles by Carlo Gallier

Carlo Gallier

ZEW – Leibniz Centre for European Economic Research

Timo Goeschl

University of Heidelberg - Alfred Weber Institute for Economics

Martin Kesternich

ZEW – Leibniz Centre for European Economic Research

Johannes Lohse

University of Birmingham - Birmingham Business School

Christiane Reif

ZEW – Leibniz Centre for European Economic Research - Environmental and Resource Economics, Environmental Management Research

Daniel Römer

ZEW – Leibniz Centre for European Economic Research

Date Written: 2019

Abstract

We study spatially differentiated competition between charities by partnering with two foodbanks in two neighboring cities to conduct a field experiment with roughly 350 donation appeals. We induce spatial differentiation by varying the observability of charities’ location such that each donor faces a socially close ‘home’ and a distant ‘away’ charity. We find that spatially differentiated competition is characterized by sorting, crowding-in, and an absence of spillovers: Donors sort themselves by distance; fundraising (through matching) for one charity raises checkbook giving to that charity, irrespective of distance; but checkbook giving to the unmatched charity is not affected. For lead donors, this implies that the social distance between donors and charities is of limited strategic important. For spatially differentiated charities, matching ‘home’ donations maximizes overall charitable income. Across both charities, however, the additional funds raised fail to cover the cost of the match, despite harnessing social identity for giving.

Keywords: altruism; public goods; charitable giving; social distance; field experiment; competition

JEL Classification: C9, D7, H4

Suggested Citation

Gallier, Carlo and Goeschl, Timo and Kesternich, Martin and Lohse, Johannes and Reif, Christiane and Römer, Daniel, Inter-Charity Competition under Spatial Differentiation: Sorting, Crowding, and Spillovers (2019). ZEW - Centre for European Economic Research Discussion Paper No. 19-039, Available at SSRN: https://ssrn.com/abstract=3466679 or http://dx.doi.org/10.2139/ssrn.3466679

Carlo Gallier (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Timo Goeschl

University of Heidelberg - Alfred Weber Institute for Economics ( email )

Bergheimer Str. 20
D-69115 Heidelberg
Germany

Martin Kesternich

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Johannes Lohse

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

Christiane Reif

ZEW – Leibniz Centre for European Economic Research - Environmental and Resource Economics, Environmental Management Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim
Germany

Daniel Römer

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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