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.
Keywords Foreign aid - Multilateral organizations - Donor demand - Public goods - Joint products - Lindahl - Nash-Cournot
JEL codes H41 - F35 - H87