Optimal Quality Strategy and Matching Service on Crowdfunding Platforms

Abstract

This paper develops a crowdfunding platform model incorporating quality and a matching service from the perspective of a two-sided market. It aims to explore the impact of different factors on the optimal quality threshold and matching service in a context of crowdfunding from the perspective of a two-sided market. We discuss the impact of different factors on the optimal quality threshold and matching service. Two important influential factors are under consideration, simultaneously. One is the quality threshold of admission and the other is the matching efficiency on crowdfunding platforms. This paper develops a two-sided market model incorporating quality, a matching service, and the characters of crowdfunding campaigns. After attempting to solve the model by derivative method, this paper identifies the mechanism of how the parameters influence the optimal quality threshold and matching service. Additionally, it compares the platform profits in scenarios with and without an exclusion policy. The results demonstrate that excluding low-quality projects is profitable when funder preference for project quality is substantial enough. Crowdfunding platform managers would be unwise to admit the quality threshold of the crowdfunding project and charge entrance fees when the parameter of funder preference for project quality is small.

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