Financing Target and Resale Pricing in Reward-Based Crowdfunding

Lei Xu, Qingxia Wu, Peng Du, Xiaojiao Qiao, Sang-Bing Tsai and Dahui Li
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Lei Xu: School of Management, Tianjin University of Technology, Tianjin 300384, China
Qingxia Wu: School of Management, Tianjin University of Technology, Tianjin 300384, China
Peng Du: School of Management, Tianjin University of Technology, Tianjin 300384, China
Xiaojiao Qiao: School of Management, Tianjin University of Technology, Tianjin 300384, China
Sang-Bing Tsai: Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528402, China
Dahui Li: Labovitz School of Business and Economics, University of Minnesota Duluth, Duluth, MN 55812-2496, USA

Sustainability, 2018, vol. 10, issue 4, 1-10

Abstract: Resale is an effective tool for reward-based crowdfunding creators to make more profit after crowdfunding successfully. On the one hand, funds raised during the crowdfunding affect the resale pricing as a capital constraint; on the other hand, backers’ strategic purchasing behavior in the resale stage can also disturb the creator’s financing target decision-making through affecting resale pricing. In view of this, this paper builds a two-stage crowdfunding model to examine the interaction between the financing target and resale pricing in the presence of strategic backers. The results show that a lower financing amount leads to higher prices in the resale stage due to the rationing effect, and suppresses price volatility due to strategic purchasing behavior. In contrast, a higher financing amount enables the creator to build a large capacity, which does not restrict the resale prices and profit. Besides, in the context of high unit production cost or high backer patience level, there is no need for the creator to set a high financing target at the risk of crowdfunding failure.

Keywords: reward-based crowdfunding; resale pricing; financing target; strategic purchasing behavior (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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