Geographic Tradability and Political Ideology in Crowdfunding

Abstract

Despite the promise of digital technologies such as crowdfunding platforms to remove geographic barriers to trade, distance and local bias effects persist on these platforms, and an active program of research is aiming to identify the drivers and mechanisms of these local bias effects. Using two novel measures of tradability in the context of crowdfunding, we show that crowdfunding campaigns in highly tradable product sectors set higher goals for their campaigns on average. However, correlational analysis suggests that the extent to which tradability can be leveraged can depend on other factors such as political context. We find that political ideology context may act as a barrier to trade such that campaigns located in blue states set higher goals than campaigns located in red states, and also show a stronger association between tradability and goal level compared to campaigns in red states. This thesis is the first ever study on tradability as well as the first ever study on political ideology in the context of reward-based crowdfunding.