Crowding-out (-in) effects of subsidy schemes on individual donations: An experimental study

Abstract

We conduct a laboratory experiment to investigate whether the rebate and matching subsidy schemes cause crowding-out or crowding-in effects (reductions or increases in amount donated) on individual net donations. We find that when the rebate subsidy scheme is implemented, it does not result in crowding-out or crowding-in effects on individual net donations. However, when the matching subsidy scheme is implemented, it encourages individuals to donate more and generates crowding-in effects on individual net donations.