Spikey or Flat? Crowdfunding and Regional Advantage

Authors: Shiri M Breznitz*, University of Toronto, Douglas S Noonan, Indiana University
Topics: Economic Geography, Location Theory
Keywords: Geographic Clustering, Digital Media,
Session Type: Paper
Day: 4/6/2019
Start / End Time: 8:00 AM / 9:40 AM
Room: Jefferson, Marriott, Mezzanine Level
Presentation File: No File Uploaded

This paper analyzes the geographic clustering of crowdfunding activity across two countries. We ask: are the financing and popularity of Kickstarter campaigns evenly distributed geographically? The promise is that it is flat, yet there is some research to suggest that we should expect otherwise. We advance this literature by applying the analysis to all of the US and Canada and by including a comprehensive set of cities. In particular, we ask whether Kickstarter funding is spikier for certain types of projects and for certain types of activity measures. We find that mobile projects will cluster more while those that are locally grounded will cluster less. Further, we can show that projects are far less spiky or clustered than funds raised or backers attracted. This is consistent with the idea that entrepreneurial talent is not evenly distributed even among the existing crowds. In addition and given that population and economic activity are already significantly spatially clustered, we examine whether Kickstarter activity is still spatially clustered once we control for the geographic distribution of that pre-existing economic activity. We use a spatial lag regression model to estimate the interactions between neighboring cities and rural regions after controlling for a host of demographic and economic factors. The results show that Kickstarter crowdfunding is flattening the already spiky world to some degree. This effect is even stronger for local projects than it is for the digital media projects. The world was already spiky, and it is a bit less so thanks to the crowd.

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