Rationing of excessive demand on crowdinvesting-platforms

Oliver Mäschle

No 126, Thuenen-Series of Applied Economic Theory from University of Rostock, Institute of Economics

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.

Keywords: crowdinvesting; market microstructure; rationing; equity; underpricing; excessive demand (search for similar items in EconPapers)
JEL-codes: D40 D45 G21 G32 L10 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:roswps:126

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