Limiting the Number of Charities

Pestieau, Pierre; Sato, Motohiro

doi:10.2139/ssrn.945080

Limiting the Number of Charities

CORE Discussion Paper 2006/74

14 Pages Posted: 19 Nov 2006

See all articles by Pierre Pestieau

Pierre Pestieau

University of Liège - Research Center on Public and Population Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Motohiro Sato

Hitotsubashi University - Faculty of Economics

Date Written: September 2006

Abstract

We consider a model where creating a charity implies a fixed cost and individual contributions depend on how close donors feel with respect to the charity. In that setting we show that there are an optimal number of charities and an optimal rate of subsidization that depend on the set-up cost and on the attachment of donors to charities that share the same values as theirs. We also consider the case of free-entry and compare it with the second-best solution controlling for the number of charities.

Keywords: charities, joy of giving

JEL Classification: L31, H41

Suggested Citation: Suggested Citation

Pestieau, Pierre and Sato, Motohiro, Limiting the Number of Charities (September 2006). CORE Discussion Paper 2006/74, Available at SSRN: https://ssrn.com/abstract=945080 or http://dx.doi.org/10.2139/ssrn.945080