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Rationing of excessive demand on crowdinvesting-platforms

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  • Mäschle, Oliver

Abstract

On crowdinvesting-platforms, non-publicly traded companies can offer equity to private investors. Currently, platforms like Crowdcube.com in Great Britain or Seedmatch.de in Germany are using a mechanism for the allocation of available shares best described by the phrase first come, first served. This paper argues that this kind of allocation of shares or rationing of excessive demand is not optimal. It describes the characteristics that rationing of excessive demand has to imply to protect the interests of involved parties in an appropriate manner. A recommendation for a concrete practical implementation is offered as well.

Suggested Citation

  • Mäschle, Oliver, 2012. "Rationing of excessive demand on crowdinvesting-platforms," Thuenen-Series of Applied Economic Theory 126, University of Rostock, Institute of Economics.
    • Handle: RePEc:zbw:roswps:126
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    More about this item

    Keywords

    crowdinvesting; market microstructure; rationing; equity; underpricing; excessive demand;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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