Economics at your fingertips  

Internalizing the externalities of overfunding: an agent-based model approach for analyzing the market dynamics on crowdfunding platforms

Jascha-Alexander Koch (), Jens Lausen () and Moritz Kohlhase ()
Additional contact information
Jascha-Alexander Koch: Goethe University Frankfurt
Jens Lausen: Goethe University Frankfurt
Moritz Kohlhase: Goethe University Frankfurt

Journal of Business Economics, 2021, vol. 91, issue 9, No 6, 1387-1430

Abstract: Abstract Crowdfunding platforms offer project initiators the opportunity to acquire funds from the Internet crowd and, therefore, have become a valuable alternative to traditional sources of funding. However, some processes on crowdfunding platforms cause undesirable external effects that influence the funding success of projects. In this context, we focus on the phenomenon of project overfunding. Massively overfunded projects have been discussed to overshadow other crowdfunding projects which in turn receive less funding. We propose a funding redistribution mechanism to internalize these overfunding externalities and to improve overall funding results. To evaluate this concept, we develop and deploy an agent-based model (ABM). This ABM is based on a multi-attribute decision-making approach and is suitable to simulate the dynamic funding processes on a crowdfunding platform. Our evaluation provides evidence that possible modifications of the crowdfunding mechanisms bear the chance to optimize funding results and to alleviate existing flaws.

Keywords: Crowdfunding; Overfunding; Internalization of externalities; Pigouvian tax; Agent-based modeling; Market engineering (search for similar items in EconPapers)
JEL-codes: C63 D47 D61 D62 G41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

DOI: 10.1007/s11573-021-01045-w

Access Statistics for this article

Journal of Business Economics is currently edited by Günter Fandel

More articles in Journal of Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2022-05-12
Handle: RePEc:spr:jbecon:v:91:y:2021:i:9:d:10.1007_s11573-021-01045-w