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Crowdfunding, Efficiency, and Inequality

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  • Grüner, Hans Peter
  • Siemroth, Christoph

Abstract

We show how decentralized individual investments can efficiently allocate capital to innovating firms via equity crowdfunding. We develop a model where consumers have privately known consumption preferences and may act as investors. Consumers identify worthwhile investments based on their own preferences and invest in firms whose product they like. An efficient capital allocation is achieved if all groups of consumers have enough wealth to invest.

Suggested Citation

  • Grüner, Hans Peter & Siemroth, Christoph, 2017. "Crowdfunding, Efficiency, and Inequality," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168081, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc17:168081
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    Cited by:

    1. Joyee Deb & Aniko Oery & Kevin R. Williams, 2018. "Aiming for the Goal: Contribution Dynamics of Crowdfunding," Cowles Foundation Discussion Papers 2149R2, Cowles Foundation for Research in Economics, Yale University, revised Feb 2023.
    2. Roland Strausz, 2017. "A Theory of Crowdfunding: A Mechanism Design Approach with Demand Uncertainty and Moral Hazard," American Economic Review, American Economic Association, vol. 107(6), pages 1430-1476, June.
    3. Eric Tassel, 2023. "Crowdfunding investors, intermediaries and risky entrepreneurs," Small Business Economics, Springer, vol. 60(3), pages 1033-1050, March.
    4. Siemroth, Christoph & Hornuf, Lars, 2023. "Why Do Retail Investors Pick Green Investments? A Lab-in-the-Field Experiment with Crowdfunders," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 74-90.
    5. Damien Besancenot & Radu Vranceanu, 2018. "Crowdfunding with overenthusiastic investors : a global game model," Working Papers hal-01718793, HAL.
    6. Joyee Deb & Aniko Oery & Kevin R. Williams, 2018. "Aiming for the Goal: Contribution Dynamics of Crowdfunding," Cowles Foundation Discussion Papers 2149, Cowles Foundation for Research in Economics, Yale University.
    7. Felipe, Israel José dos Santos & Mendes-Da-Silva, Wesley & Leal, Cristiana Cerqueira & Braun Santos, Danilo, 2022. "Reward crowdfunding campaigns: Time-to-success analysis," Journal of Business Research, Elsevier, vol. 138(C), pages 214-228.
    8. Du, Shaofu & Peng, Jing & Nie, Tengfei & Yu, Yugang, 2020. "Pricing strategies and mechanism choice in reward-based crowdfunding," European Journal of Operational Research, Elsevier, vol. 284(3), pages 951-966.
    9. Sha Zhou & Tao Ma & Zhengchi Liu, 2021. "Crowdfunding as a screener for collective investment," Electronic Commerce Research, Springer, vol. 21(1), pages 195-221, March.
    10. Strausz, Roland, 2017. "A Theory of Crowdfunding," Rationality and Competition Discussion Paper Series 2, CRC TRR 190 Rationality and Competition.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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