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Financing Target and Resale Pricing in Reward-Based Crowdfunding

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  • Lei Xu

    (School of Management, Tianjin University of Technology, Tianjin 300384, China
    Business School, Nankai University, Tianjin 300071, 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)

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.

Suggested Citation

  • Lei Xu & Qingxia Wu & Peng Du & Xiaojiao Qiao & Sang-Bing Tsai & Dahui Li, 2018. "Financing Target and Resale Pricing in Reward-Based Crowdfunding," Sustainability, MDPI, vol. 10(4), pages 1-10, April.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:4:p:1297-:d:142620
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    References listed on IDEAS

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    2. Sun, Yanhong & Sheng, Yiyun & Yan, Shuai & Zhang, Wei, 2023. "Pricing strategies in reward-based crowdfunding: Whether to introduce price guarantee?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    3. Jackson Jinhong Mi & Zongsheng Huang & Kai Wang & Sang-Bing Tsai & Guodong Li & Jiangtao Wang, 2018. "The Presence of a Powerful Retailer on Dynamic Collecting Closed-Loop Supply Chain From a Sustainable Innovation Perspective," Sustainability, MDPI, vol. 10(7), pages 1-17, June.
    4. Xin Tang & Haibing Lu & Wei Huang & Shulin Liu, 2023. "Investment decisions and pricing strategies of crowdfunding players: In a two-sided crowdfunding market," Electronic Commerce Research, Springer, vol. 23(2), pages 1209-1240, June.
    5. Kai Wang & Haomin Zhang & Sang-Bing Tsai & Jin Jiang & Yun Sun & Jiangtao Wang, 2018. "An Empirical Study on Effective Tax Rate and CEO Promotion: Evidence from Local SOEs in China," Sustainability, MDPI, vol. 10(6), pages 1-16, June.
    6. Aijun Liu & Xiaohui Ji & Sang-Bing Tsai & Hui Lu & Gang Du & Feng Li & Guodong Li & Jiangtao Wang, 2018. "An Empirical Study on the Innovation Sharing Express Box: Collaborative Consumption and the Overlay Network Design," Sustainability, MDPI, vol. 10(7), pages 1-19, June.

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