MIT Libraries logoDSpace@MIT

MIT
View Item 
  • DSpace@MIT Home
  • MIT Open Access Articles
  • MIT Open Access Articles
  • View Item
  • DSpace@MIT Home
  • MIT Open Access Articles
  • MIT Open Access Articles
  • View Item
JavaScript is disabled for your browser. Some features of this site may not work without it.

Some Simple Economics of Crowdfunding

Author(s)
Goldfarb, Avi; Agrawal, Ajay K; Catalini, Christian
Thumbnail
DownloadSome+Simple+Economics+of+Crowdfunding.pdf (2.287Mb)
OPEN_ACCESS_POLICY

Open Access Policy

Creative Commons Attribution-Noncommercial-Share Alike

Terms of use
Creative Commons Attribution-Noncommercial-Share Alike http://creativecommons.org/licenses/by-nc-sa/4.0/
Metadata
Show full item record
Abstract
It is not surprising that the financing of early-stage creative projects and ventures is typically geographically localized since these types of funding decisions are usually predicated on personal relationships and due diligence requiring face-to-face interactions in response to high levels of risk, uncertainty, and information asymmetry. So, to economists, the recent rise of crowdfunding - raising capital from many people through an online platform - which offers little opportunity for careful due diligence and involves not only friends and family but also many strangers from near and far, is initially startling. On the eve of launching equity-based crowdfunding, a new market for early-stage finance in the U.S., we provide a preliminary exploration of its underlying economics. We highlight the extent to which economic theory, in particular transaction costs, reputation, and market design, can explain the rise of non-equity crowdfunding and offer a framework for speculating on how equity-based crowdfunding may unfold. We conclude by articulating open questions related to how crowdfunding may affect social welfare and the rate and direction of innovation.
Date issued
2014
URI
http://hdl.handle.net/1721.1/108043
Department
Sloan School of Management
Journal
Innovation Policy and the Economy 2013
Publisher
University of Chicago Press
Citation
Agrawal, Ajay K., Catalini, Christian, and Goldfarb, Avi. "Some Simple Economics of Crowdfunding." Innovation Policy and the Economy 2013, ed. Josh Lerner and Scott Stern, Univeristy of Chicago Press, 2014, 1-47. © 2014 National Bureau of Economic Research Innovation Policy and the Economy
Version: Author's final manuscript
ISBN
9780226158563

Collections
  • MIT Open Access Articles

Browse

All of DSpaceCommunities & CollectionsBy Issue DateAuthorsTitlesSubjectsThis CollectionBy Issue DateAuthorsTitlesSubjects

My Account

Login

Statistics

OA StatisticsStatistics by CountryStatistics by Department
MIT Libraries
PrivacyPermissionsAccessibilityContact us
MIT
Content created by the MIT Libraries, CC BY-NC unless otherwise noted. Notify us about copyright concerns.