Abstract
We present a stylized model of three entrepreneurial financing methods based on two tradeoffs. First, token financing and crowdfunding reveal consumer-investors’ demand for the product prior to investment, but upfront purchase weakens the entrepreneur’s incentive to deliver. Second, token financing permits a bubble component in token value, but reduces consumer surplus.
Keywords
crowdfunding, entrepreneurial financing, initial coin offering, token regulation,; utility token;
JEL codes
- G32: Financing Policy • Financial Risk and Risk Management • Capital and Ownership Structure • Value of Firms • Goodwill
- G38: Government Policy and Regulation
- L26: Entrepreneurship
Replaces
Edmond Baranes, Ulrich Hege, and Jin-Hyuk Kim, “Token Financing vs. Equity and Crowdfunding”, TSE Working Paper, n. 26-1730, March 2026.
Reference
Edmond Baranes, Ulrich Hege, and Jin-Hyuk Kim, “Token Financing vs. Equity and Crowdfunding”, Economics Letters, 2026, forthcoming.
See also
Published in
Economics Letters, 2026, forthcoming