Belleflamme, Omrani and Peitz (2015)
Contents
Source Details
| Belleflamme, Omrani and Peitz (2015) | |
| Title: | The Economics of Crowdfunding Platforms |
| Author(s): | Belleflamme, P., Omrani, N., Peitz, M. |
| Year: | 2015 |
| Citation: | Belleflamme, P., Omrani, N. and Peitz, M., 2015. The economics of crowdfunding platforms. Information Economics and Policy, 33, pp.11-28. |
| Link(s): | Definitive , Open Access |
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| About the Data | |
| Data Description: | This study is comprised of literature review, including a particular study of the literature on examples in France. It contains no original data. |
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| Cross Country Study?: | Yes |
| Comparative Study?: | No |
| Literature review?: | Yes |
| Government or policy study?: | No |
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Abstract
This paper provides a description of the crowdfunding sector, considering investment based crowdfunding platforms as well as platforms in which funders do not obtain monetary payments. It lays out key features of this quickly developing sector and explores the economic forces at play that can explain the design of these platforms. In particular, it elaborates on cross-group and within-group external effects an asymmetric information on crowdfunding platforms.
Main Results of the Study
Crowdfunding allows the fund-seeking group to find new contributors and therefore future customers before the release of the product on the market. Brands under development may enjoy early funding and consumers may benefit from a lower price during the launch period of the product or brand.Crowdfunding opens the possibility to 'engage' the brands with their contributors and may stimulate the demand for the product. The success of such campaign facilitates the promotion of the product through the communityalready engaged during the campaign.
Policy Implications as Stated By Author
The authors argue that, to understand the business models of CFPs, a two-sided markets perspective should be adopted. The interaction among funders and fundraisers on a platform is characterized by cross-group andwithin-group external effects. Information asymmetries loom large on CFPs. They pose several challenges for the design and governance of the platform. In particular, CFPs face the challenge to make relevant information easily available while at the same time to encourage information gathering, in particular on the funder side.
Coverage of Study
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