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The roles of crowdfunding: financing, point provision and ex-post production

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  • Yang Xu
  • Wen Song
  • Gong-bing Bi

Abstract

While most researches focus on the financing role of crowdfunding, the functions of ex-post production and point provision have not been deeply investigated yet. In this paper, we reveal the three roles of crowdfunding from the perspective of operations management, wherein the ex-post production role can ensure the on-demand production, and the point provision mechanism can alleviate the risk of demand uncertainty. We construct mathematical models to derive the maximised performance of crowdfunding with the three roles in a holistic framework. Our results show that the synthetic of three roles can achieve maximisation performance, and crowdfunding also can improve consumer welfare by lowering the price or raising product quality. To prevent moral hazard, we further illustrate the existence of separate equilibrium by introducing partial pre-payment contract in the asymmetrical information situation. However, the separation cost is high when the initial capital is limited. Our research can shed light on crowdfunding operations.

Suggested Citation

  • Yang Xu & Wen Song & Gong-bing Bi, 2021. "The roles of crowdfunding: financing, point provision and ex-post production," International Journal of Production Research, Taylor & Francis Journals, vol. 59(23), pages 7037-7056, December.
    • Handle: RePEc:taf:tprsxx:v:59:y:2021:i:23:p:7037-7056
    DOI: 10.1080/00207543.2020.1832277
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    Cited by:

    1. Xu, Yang & Zhou, Qiang & Wang, Xu, 2023. "Joint price and quality optimization strategy in crowdfunding campaign," International Journal of Production Economics, Elsevier, vol. 263(C).
    2. Xu, Shengshuo & Ling, Liuyi & Du, Shaofu & Liu, Lindong, 2023. "Crowdfunding or traditional mode? Strategy choices in product selling," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 172(C).

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