DP6511 Internationalization of NGOs and Competition on Markets for Development Donations

Author(s): Gani Aldashev, Thierry Verdier
Publication Date: October 2007
Keyword(s): internationalization, monopolistic competition, NGOs, non-distribution constraint
JEL(s): F12, F23, L31
Programme Areas: International Trade and Regional Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=6511

What are the effects of the integration of markets for private donations for development on NGOs? performance? How is the welfare of donors and beneficiaries affected? To answer these questions, we build a model of a market for development donations with horizontally differentiated NGOs competing by fundraising effort. We compare three regimes: autarky, full integration, and the regime of multinational NGOs (in which NGOs have to establish foreign affiliates to raise funds abroad). The welfare impact of market integration depends on the interplay between three factors: returns to scale in the NGO production technology, donors? "taste for variety", and the effectiveness of aggregate fundraising in motivating new donors.