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The Dark Side of Transparency: Mission Variety and Industry Equilibrium in Decentralized Public Good Provision

Author

Listed:
  • Gani Aldashev

    (ECARES, SBS-EM, Université libre de Bruxelles)

  • Esteban Jaimovich

    (University of Surrey)

  • Thierry Verdier

    (PSE/École des Ponts-ParisTech/PUC Rio/CEPR)

Abstract

We study the implications of transparency policies on decentralized public good provision. The moral hazard inside non-profits interacts with the competitive structure of the sector under alternative informational regimes. More transparency on the use of funds has an ambiguous e§ect on the total public good provision and donors’ welfare. Transparency encourages non-profits to more actively curb rent-seeking inside organizations, but it also tilts the playing field against non-profits facing higher monitoring costs, inducing them to abandon their missions and reducing non-profit diversity. Donors’ welfare is lower under transparency for intermediate levels of asymmetry in monitoring costs.

Suggested Citation

  • Gani Aldashev & Esteban Jaimovich & Thierry Verdier, 2022. "The Dark Side of Transparency: Mission Variety and Industry Equilibrium in Decentralized Public Good Provision," Working Papers 125, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:125
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    Cited by:

    1. Michael Kopel & Marco A. Marini, 2020. "Mandatory Disclosure of Managerial Contracts in Nonprofit Organizations," Working Papers 23/20, Sapienza University of Rome, DISS.
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    3. Kopel, Michael & Marini, Marco A., 2022. "Mandatory disclosure of managerial contracts in NGOs," Journal of Economic Behavior & Organization, Elsevier, vol. 199(C), pages 65-85.

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    More about this item

    Keywords

    public goods; non-profit organizations; charitable giving; altruism; transparency.;
    All these keywords.

    JEL classification:

    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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