Matched Charitable Contributions: Comparative Statics and Equilibrium

Copyright © 2013 Daniel K. Biederman. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. A small optimizing agent maximizes his utility by allocating his income to private consumption and to a contribution to a particular charity. The agent’s contribution may be matched, at a particular rate, by a large agent. We provide a com-prehensive comparative-statics analysis of the agent’s problem, allowing for changes in the agent’s income, the agent’s conjecture about other agents ’ contributions, and the match rate. A Nash equilibrium among n such agents is shown to exist if private consumption is a normal good for all agents. The equilibrium is unique if private consumption and charitable giving are normal goods for all agents