Information Asymmetry in Quasi Public Good Crowdfunding: A Case from China s EV Charging Pile Market

Transcription

1 Information Asymmetry in Quasi Public Good Crowdfunding: A Case from China s EV Charging Pile Market Yan LI a, Qi ZHANG a,*, Lijing ZHU a, Ge WANG a, Siyuan CHEN a a Academy of Chinese Energy Strategy, China University of Petroleum-Beijing, 18 Fuxue Road, Changping Dist., Beijing , China

2 Content Introduction Methodology Result Conclusion 2

3 Background Cope with energy exhaustion Reducing air pollution Emerging battery technologies Developing electric vehicle (EV) has became a irreversible trend. 3

4 Quantity of Charging Piles and EVs (thousand) Background Insufficiency of charging piles in China The amount of public charging piles only takes 23.29% of private EVs Public Charging Piles Private EVs (goal) Current condition and future goal of EVs and charging piles in Beijing Source: Wind DB 4

5 Background Financing difficulties of quasi public good Quasi public good provides benefits to the public, but could theoretically be restricted with a toll system. Utilities (roads, pipelines, parks, etc.) Distributed energy system (residential area PV power system, charging piles, residential heating system, etc.) High externality Offer by government free ride instead of offer QPG independently undersupply of QPG 5

6 Background Crowdfunding Definition funding a project or venture by raising monetary contributions from a large number of people. Benefits risk diversification many a little makes a mickle gather information from crowds promote product design 6

7 Background Main obstacle in Chinese crowdfunding market High default rate undermines investors confidence Lack of supervision U.S.A. JOBS (Jumpstart Our Business Startups Act) Italy Decreto Crescita Bis Information Asymmetry 7

8 Content Introduction Methodology Result Conclusion 8

9 Research Scale amount of adjacent nodes with positive views total amount of adjacent nodes 1 Herd effect (different from rational man) Give up Dilemma Zone Join 2 Social reputation (consider default risk) The formation of reputation along the social network Social Network (scale-free network) In scale-free network small-world effects coexist with a large heterogeneity in neighborhood size, which is a good abstract of the realworld. 9

10 Research Scale amount of adjacent nodes with positive views total amount of adjacent nodes 1 Herd effect (different from rational man) Give up Dilemma Zone Join 2 Social reputation (consider default risk) The formation of reputation along the social network Social Network (scale-free network) In scale-free network small-world effects coexist with a large heterogeneity in neighborhood size, which is a good abstract of the realworld. 10

11 Research Scale Make decisions based on the potential profit 1 Herd effect (different from rational man) Give up Dilemma Zone Join 2 Social reputation (consider the impacts of default risk) The formation of reputation along the social network Social Network (scale-free network) In scale-free network small-world effects coexist with a large heterogeneity in neighborhood size, which is a good abstract of the realworld. 11

12 Different Projects Decision Horizon Periods Potential Crowdfunders Join or not (at the beginning of each project) Crowdfunding Platform Default or not (for each existing project) 12

13 Flowchart of Methodology t=t+1 t T Do not join 3 2 Potential Crowdfunders Observe the attitudes of adjacent nodes Calculate the potential profit of joining crowdfunding f(r) Start (Initialization) Join 1 4 Crowdfunding Platform Set the parameter of crowdfunding Default? Calculate existing projects Construct quasi public goods of the new projects Crowdfunding Platform t=t+1 t T Pay dividends 1. Dividend rate proportion of revenue that CFrs can get from CF Platform Stop 13

14 Flowchart of Methodology t=t+1 t T Do not join 3 2 Potential Crowdfunders Observe the attitudes of adjacent nodes Calculate the potential profit of joining crowdfunding f(r) Start (Initialization) Join 1 4 Crowdfunding Platform Set the parameter of crowdfunding Default? Calculate existing projects Construct quasi public goods of the new projects Crowdfunding Platform t=t+1 t T Pay dividends 1. Dividend rate 2. Herd Effect the threshold of make decision directly instead of calculate the profit Stop 14

15 Flowchart of Methodology t=t+1 t T Do not join 3 2 Potential Crowdfunders Observe the attitudes of adjacent nodes Calculate the potential profit of joining crowdfunding f(r) Start (Initialization) Join 1 4 Crowdfunding Platform Set the parameter of crowdfunding Default? Calculate existing projects Construct quasi public goods of the new projects Crowdfunding Platform t=t+1 t T Pay dividends 1. Dividend rate 2. Herd Effect 3. Scale Effect the revenue of each QPG is positively related to its market scale Stop 15

16 Flowchart of Methodology t=t+1 t T Do not join 3 2 Potential Crowdfunders Observe the attitudes of adjacent nodes Calculate the potential profit of joining crowdfunding f(r) Start (Initialization) Join 1 4 Crowdfunding Platform Set the parameter of crowdfunding Default? Calculate existing projects Construct quasi public goods of the new projects Crowdfunding Platform t=t+1 t T Pay dividends 1. Dividend rate 2. Herd Effect 3. Scale Effect 4. Policy Penalty fine the CF Platform a certain proportion of the revenue if they choose to default Stop 16

17 Crowdfunders Potential profit (don t know the specific value of scale and default factor) (1) yield forecast (Scale effect) (2) 1 Charging pile EV sales revenue of charging pile Default forecast (based on historical data) 2 Scale forecast 3 Random variable describes the change of yield that can t be explained by scale factor 17

18 Crowdfunding Platform Potential profit (knows the specific value of scale and default factor) (3) Yield forecast (Scale effect) Default (at most once in each project) 18

19 Information Asymmetry 1. Decision variables Crowdfunding Platform Default or not Potential Crowdfunders Join or not 2. Market scale NOD r + Crowdfunding Platform Potential Crowdfunders Crowdfunding scale 19

20 Content Introduction Methodology Result Conclusion 20

21 Data menclature Implications Value NOD Total amount of nodes 2000 PJ Duration of each project 10 T Amount of projects 30 PCF Financing amount of each contract 1.2 CCP Construction cost of charging pile 0.2 RCF 0 Initial dividend ratio 0.5 ST e,c 0 FEE 0 Initial expected yield 0.15 Degree of scale-free network 3 Times of simulation

22 Sensitivity - Herd effect Default ratio Join ratio Lower threshold Higher threshold 1. The lower threshold in decision making significantly impacts the crowdfunding scale (join ratio). people are more likely to be affected by the negative attitude 22

23 Sensitivity - Scale effect Default ratio Join ratio Slope of yield forecast Slope of yield forecast 2. The stronger the scale effect is, the more investors it will attract and the lower default ratio will be. 23

24 Sensitivity - Dividend ratio Default ratio Join ratio Dividend ratio Dividend ratio 3. The dividend ratio has a positive correlation with the join ratio or the default ratio. So there exist an optimal value for dividend ratio:

25 Penalty 1 reduce the default rate; 2 enhance investors confidence. Default ratio Join ratio 4. The increase of penalty significantly reduce the default ratio and increase platform s profit. 25

26 Content Introduction Methodology Result Conclusion 26

27 Conclusion 1. The lower threshold in decision making significantly impacts the crowdfunding scale (join ratio). 2. The stronger the scale effect is, the more investors it will attract and the lower the default ratio will be. 3. The dividend ratio has a positive correlation with the join ratio or the default ratio. So there exist an optimal value for dividend ratio: The increase of penalty significantly reduce the default ratio and increase platform s profit. Suggestion: 1. For CF Platforms: Enhance advertising Set the dividend ratio around For government: Implemented a strict penalty mechanism (at least 60%). 27

28 Thank you for your attention~ Yan LI Academy of Chinese Energy Strategy, China University of Petroleum-Beijing, 18 Fuxue Road, Changping Dist., Beijing , China