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Crowdfunding: tapping the right crowd



    () (Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium)

  • LAMBERT, Thomas

    () (Université catholique de Louvain, Louvain School of Management, B-1348 Louvain-la-Neuve, Belgium)


    () (Université Lille Nord de France, SKEMA Business School, F-59020 Lille Cedex, France)


The basic idea of crowdfunding is to raise external finance from a large audience (the “crowd”), where each individual provides a very small amount, instead of soliciting a small group of sophisticated investors. The paper develops a model that associates crowdfunding with pre-ordering and price discrimination, and studies the conditions under which crowdfunding is preferred to traditional forms of external funding. Compared to traditional funding, crowdfunding has the advantage of offering an enhanced experience to some consumers and, thereby, of allowing the entrepreneur to practice menu pricing and extract a larger share of the consumer surplus; the disadvantage is that the entrepreneur is constrained in his/her choice of prices by the amount of capital that he/she needs to raise: the larger this amount, the more prices have to be twisted so as to attract a large number of “crowdfunders” who pre-order, and the less profitable the menu pricing scheme.

Suggested Citation

  • BELLEFLAMME, Paul & LAMBERT, Thomas & SCHWIENBACHER, Armin, 2011. "Crowdfunding: tapping the right crowd," CORE Discussion Papers 2011032, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2011032

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    References listed on IDEAS

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    Cited by:

    1. Regner, T. & Crosetto, P., 2017. "The experience matters. Participation-related rewards increase the success chances of crowdfunding campaigns," Working Papers 2017-04, Grenoble Applied Economics Laboratory (GAEL).
    2. Matthew Ellman & Sjaak Hurkens, 2014. "Optimal Crowdfunding Design," Working Papers 14-21, NET Institute.
    3. Hornuf, Lars & Schwienbacher, Armin, 2015. "Funding Dynamics in Crowdinvesting," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112969, Verein für Socialpolitik / German Economic Association.
    4. Leimeister, Jan Marco & Zogaj, Shkodran, 2013. "Neue Arbeitsorganisation durch Crowdsourcing: Eine Literaturstudie," Arbeitspapiere 287, Hans-Böckler-Stiftung, Düsseldorf.
    5. Massimiliano Gambardella, 2011. "The Scope of Open Licenses in Cultural Contents Production and Distribution," EconomiX Working Papers 2011-26, University of Paris Nanterre, EconomiX.
    6. Rubinton, Brian J, 2011. "Crowdfunding: disintermediated investment banking," MPRA Paper 31649, University Library of Munich, Germany.
    7. Lars Hornuf & Armin Schwienbacher, 2015. "Funding Dynamics in Crowdinvesting," Research Papers in Economics 2015-09, University of Trier, Department of Economics.
    8. 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.
    9. Paolo Crosetto & Tobias Regner, 2014. "Crowdfunding: Determinants of success and funding dynamics," Jena Economic Research Papers 2014-035, Friedrich-Schiller-University Jena.
    10. Mäschle, Oliver & Dalvai, Wilfried, 2016. "Rationing and screening in crowdinvesting-markets," Thuenen-Series of Applied Economic Theory 142, University of Rostock, Institute of Economics.
    11. Daniel A. Brent & Katie Lorah, 2017. "The Geography of Civic Crowdfunding: Implications for Social Inequality and Donor-Project Dynamics," Departmental Working Papers 2017-09, Department of Economics, Louisiana State University.
    12. Cerezo Sánchez, David, 2017. "An Optimal ICO Mechanism," MPRA Paper 81285, University Library of Munich, Germany.

    More about this item


    crowdfunding; pre-ordering; menu pricing;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship


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