Brothers in Alms? Coordination between NGOs on Markets for Development Donations

33 Pages Posted: 29 Nov 2010

See all articles by Gani Aldashev

Gani Aldashev

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES); University of Namur

Marco A. Marini

Marco A. Marini; University of Rome La Sapienza

Thierry Verdier

Paris School of Economics (PSE); Pontifical Catholic University of Rio de Janeiro (PUC-Rio) - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: November 2010

Abstract

This paper studies the stability of coordination between mission-driven non-governmental organizations (NGOs) competing for donations. We build a non-cooperative game-theoretic model of alliance formation between NGOs that compete through fundraising activities and impose externalities on each others' output. We derive general results on the stability of full coordination under two classes of alliance-formation rules: unanimity and aggregative. If fundraising activities are strategic complements, the grandcoalition (i.e. full coordination) is always individually stable and, under the unanimity rule, coalitionally stable. When fundraising activities are strategic substitutes, the grandcoalition can be unstable and the instability is more likely, the steeper are NGOs' (negatively sloped) best-reply functions. Under the aggregative rule, the grandcoalition is stable: (i) individually, if there are negative coalitional externalities; (ii) coalitionally, if breaking an alliance requires the majority of NGOs involved in the alliance.

Keywords: coordination, endogenous coalition formation, giving, NGOs, non-distribution constraint

JEL Classification: C72, D74, L31, L44

Suggested Citation

Aldashev, Gani and Aldashev, Gani and Marini, Marco A. and Verdier, Thierry, Brothers in Alms? Coordination between NGOs on Markets for Development Donations (November 2010). CEPR Discussion Paper No. DP8109, Available at SSRN: https://ssrn.com/abstract=1714881

Gani Aldashev (Contact Author)

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium

University of Namur ( email )

8 rempart de la vierge
Namur, 5000
Belgium

Marco A. Marini

Marco A. Marini ( email )

Piazzale Aldo Moro, 5
Roma, 00185
Italy

HOME PAGE: http://sites.google.com/a/uniroma1.it/marcomarini/

University of Rome La Sapienza ( email )

29
Roma, 00185
Italy
+39 06 49910843 (Phone)

HOME PAGE: http://sites.google.com/a/uniroma1.it/marcomarini

Thierry Verdier

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014
France

Pontifical Catholic University of Rio de Janeiro (PUC-Rio) - Department of Economics ( email )

Rua Marques de Sao Vicente, 225/206F
Rio de Janeiro, RJ 22453
Brazil

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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