Sustainable product development under profit-sharing crowdfunding: an analytical approach to market structure and government policy

Raziyeh Reza-Gharehbagh () and Madeleine Pullman
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Raziyeh Reza-Gharehbagh: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School
Madeleine Pullman: University of Sussex

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Abstract: This study develops an integrated analytical framework to examine how crowdfunding, market structure, and government policy interact to shape environmentally sustainable product development (SPD). Focusing on profit-sharing and securities-based crowdfunding, we model how investor opportunity costs, risk preferences, platform fees, and regulatory schemes (voluntary vs. mandatory under fiscal vs. non-fiscal policy regimes) influence firm strategies and outcomes across economic, social, and environmental (ESE) dimensions. Firm behavior is analyzed under monopoly and duopoly settings to explore variation in market power and competitive intensity. Findings reveal that voluntary greening can achieve strong ESE outcomes in monopolistic markets with low financial frictions and environmentally aware consumers. In contrast, competitive or uncertain environments often require benchmark-based regulation and fiscal instruments to sustain environmental investments. Two dominant firm profiles emerge: the Voluntary sustainability leader, which performs well under favorable market and investor conditions without policy intervention, and the Policy-driven strategist, which depends on regulatory standards and fiscal tools to overcome competitive pressures and risk constraints. By formalizing investor-entrepreneur interactions and embedding environmental quality as a strategic variable, this research advances the literature on crowdfunding and market-driven sustainability. It provides actionable insights for aligning crowdfunding design and policy frameworks with the broader goals of green innovation and public sustainability.

Keywords: Environmental standards; Greening efforts; Government policy; Crowdfunding; Sustainable product development (search for similar items in EconPapers)
Date: 2026-01-16
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Published in European Journal of Operational Research, 2026, 328 (2), pp.704-724. ⟨10.1016/j.ejor.2025.08.020⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05568807

DOI: 10.1016/j.ejor.2025.08.020

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