The Economics of Crowdfunding Platforms

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 e¤ects and asymmetric information on crowdfunding platforms. Keywords: Crowdfunding, Platform markets, Network e¤ects, Asymmetric information, P2P lending JEL-Classi…cation: L13, D62, G24 Université catholique de Louvain, CORE and Louvain School of Management, and CESifo yRITM, University of Paris Sud and Digital Society Institute zUniversity of Mannheim, Mannheim Centre for Competition and Innovation (MaCCI), and CERRE. Email: martin.peitz@gmail.com

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