Platform contract selection and coordination contract design in reward-based crowdfunding

Abstract

<p style='text-indent:20px;'>As a new financing method, crowdfunding has alleviated the capital pressure for start-ups, and has attracted extensive attention of scholars. As an intermediary, crowdfunding platforms obtain benefits from providing services. However, the way of charging commission fees still remains a problem for platforms. This paper investigates the impacts of three service contracts, i.e., revenue sharing contract, per-unit fee contract, and fixed fee contract on the creator and platform. Using backward induction, we derive equilibrium results and get some conclusions. First, we find that under fixed fee contract, due to the trade-off between commission fee and crowdfunding success probability, the platform can only make decisions according to first-order conditions, and get partial profits from the creator. This contradicts the traditional view that the fixed fee contract allows leaders to get all the follower's profits in a stackelberg game. Further, we find that compared with revenue sharing contract and per-unit fee contract, the fixed fee contract is mostly although, not always worse (better) for the platform and system (the creator). Third, in the case of consumer homogeneity, we prove the equivalence of revenue sharing contract and per unit fee contract. However, we find that the efficiency of revenue sharing contract decreases when quality is endogenous, while when consumers are heterogeneous, the advantage of per unit fee contract for the platform decreases. In addition, we design a two-part tariff contract and prove that it can achieve coordination when the platform bears partial fixed cost. The two-part tariff contract can simultaneously improve the benefits of all parties with the appropriate parameters.</p>