Abstract
This paper tests a model where governmentand private charity are perfect substitutesin consumption, but the cost of providingcharitable assistance differs betweenprivate and government suppliers. Theanalysis demonstrates that higher costs oftransferring through the government canaccount for the observed phenomenon of lessthan complete crowding out and theempirical results are broadly consistentwith that approach. Overall the evidenceis consistent with the hypothesis thatindividuals both care about the leakagesinvolved in transferring funds to the poorthrough government and respond in theirprivate giving to changes in thedifferential public cost.
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Ferris, J.S., West, E.G. Private Versus Public Charity: Reassessing Crowding Out from the Supply Side. Public Choice 116, 399–417 (2003). https://doi.org/10.1023/A:1024803611758
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DOI: https://doi.org/10.1023/A:1024803611758