Abstract

Competition with spatial differentiation is a commonly encountered market structure in the non-profit sector: Providers of nearly identical charitable goods compete for donations while based at different locations in space. We partner with two foodbanks in neighboring cities to conduct a field experiment (n = 402) and use one treatment to induce the spatially differentiated market structure through disclosure of the foodbanks’ location. Predictably, this market structure activates a ‘home bias’, leading to higher donations for the socially closer “home charity” that are offset by lower donations to the “away” charity. In the main treatment, we introduce into the spatially differentiated market structure the classic linear (dollar-for-dollar) match for donations and examine both crowding effects, i.e. effects on the matched charity, and spillover effects, i.e. effects on an unmatched charity operating in the same marked and thus on aggregate checkbook giving. We find that a match always crowds in donations to the matched charity, irrespective of the social distance. Surprisingly, however, a match does not lead to negative spillovers for the unmatched charity, with evidence for positive spillovers from matching the home charity to donations for the away charity. Highest aggregate donations result in a spatially differentiated charitable sector when the home charity is matched

Practical information