Online Group Buying and Crowdfunding: Two Cases of All-or-Nothing Mechanisms

Part of the Springer Series in Supply Chain Management book series (SSSCM, volume 6)


This chapter focuses on the two popular business models, namely, online group buying and crowdfunding. Both models use variations of all-or-nothing mechanisms, where transactions will take place only if the total number of committed purchases/pledges exceeds a specified threshold within a certain period. We seek to understand the impact of all-or-nothing mechanisms on consumer behavior, as well as the optimal design of such mechanisms, from the perspective of third-party platforms like Groupon and Kickstarter. First, using a dataset from the online group buying industry, we empirically identify two types of threshold-induced effects on consumer behavior. Next, we study optimal information disclosure and pricing strategies under all-or-nothing mechanisms. We show that it is always beneficial for the firm to disclose the cumulative number of sign-ups to reduce the uncertainty for later arrivals. Regarding pricing, we show that the introduction of a price menu for the same product can be a win-win for both the creator and buyers.


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© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Rotman School of ManagementUniversity of TorontoTorontoCanada
  2. 2.Imperial College Business SchoolImperial College LondonLondonUK

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