Abstract
Donor’s demand equations for alternative forms of aid are derived for three allocation processes: noncooperative Nash-Cournot, cooperative Lindahl, and bureaucratic. Based on OECD data for official development assistance for 1970–2001, we apply non-nested tests to distinguish between Nash-Cournot and Lindahl reduced-form equations for 15 major donor nations. Noncooperative Nash-Cournot behavior characterizes many donors, with a few abiding by bureaucratic behavior and none by Lindahl behavior. Joint products are present for multilateral and bilateral giving. Despite the common-pool nature of giving to multilateral organizations, countries derive donor-specific benefits and often view others’ donations as complementary to their own gifts.
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Mascarenhas, R., Sandler, T. Do donors cooperatively fund foreign aid?. Rev Int Org 1, 337–357 (2006). https://doi.org/10.1007/s11558-006-9491-7
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DOI: https://doi.org/10.1007/s11558-006-9491-7