In or out? Crowding effects in public goods with private gifts: Evidence from crowdfunding

Abstract

How do cumulative contributions influence subsequent giving to public goods that offer private gifts? While prior research has examined contribution dynamics in fundraising, the role of excludability — the property of preventing noncontributors from accessing the good — remains largely unexplored. We use comprehensive data from a reward-based crowdfunding platform to show that the excludability of a project significantly shapes its contribution pattern. We introduce two novel measures of excludability: one based on a good’s inherent characteristics and another derived from the geographic distribution of backer-project distances. Our analysis reveals that more excludable goods (such as local projects and tangible products) exhibit stronger crowding-in effects, whereas less excludable ones (such as global projects and journalism) experience crowding-out effects. Although crowdfunding platforms systematically highlight cumulative contributions, our findings suggest that fundraisers should emphasize this information, particularly for excludable goods, but not for the least excludable ones.