Spillovers in Crowdfunding

52 Pages Posted: 25 Oct 2018 Last revised: 27 Dec 2021

See all articles by Paul Belleflamme

Paul Belleflamme

CORE/LIDAM, UCLouvain (Université Catholique de Louvain); CESifo (Center for Economic Studies and Ifo Institute)

Thomas Lambert

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Armin Schwienbacher

SKEMA Business School

Multiple version iconThere are 2 versions of this paper

Date Written: December 22, 2021

Abstract

We use novel entrepreneur-backer data to study the extent to which spillovers arise between projects displayed on crowdfunding platforms. We find that backers decide to back a particular project based on past contributions not only to that project—as documented by prior work—but also to other contemporaneous projects—a novel result. Our difference-in-differences estimates indicate that such ``cross-project spillovers'' account for 4-5% in the increase of contributions that projects generate on a daily basis. We show that recurrent backers are an important transmission channel of cross-project spillovers: by initiating social learning about project existence and quality, recurrent backers encourage future funding by other backers. Our results demonstrate that even though contemporaneous projects compete for funding, they jointly benefit from their common presence on the platform. Our results have implications for digital platform management and competition.

Keywords: crowdfunding, digital platforms, network effects, spillovers, social learning

JEL Classification: D43, G23, L14, L26, L86

Suggested Citation

Belleflamme, Paul and Lambert, Thomas and Schwienbacher, Armin, Spillovers in Crowdfunding (December 22, 2021). Available at SSRN: https://ssrn.com/abstract=3259191 or http://dx.doi.org/10.2139/ssrn.3259191

Paul Belleflamme

CORE/LIDAM, UCLouvain (Université Catholique de Louvain) ( email )

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HOME PAGE: http://www.paulbelleflamme.com

CESifo (Center for Economic Studies and Ifo Institute)

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Germany

Thomas Lambert (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

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Rotterdam, 3000 DR
Netherlands

HOME PAGE: http://www.thomaslambert.org

Erasmus Research Institute of Management (ERIM) ( email )

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3000 DR Rotterdam
Netherlands

Armin Schwienbacher

SKEMA Business School ( email )

Avenue Willy Brandt
Euralille, 59777
France

HOME PAGE: http://sites.google.com/view/armin-schwienbacher

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