The Economics of Crowdfunding Platforms

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 and asymmetric information on crowdfunding platforms.

Keywords: Crowdfunding, Platform markets, Network effects, Asymmetric information, P2P lending

JEL Classification: L13, D62, G24