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Token-Based Platform Finance / Lin William Cong, Ye Li, Neng Wang.
- Format:
- Book
- Author/Creator:
- Cong, Lin William.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w27810.
- NBER working paper series no. w27810
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2020.
- Summary:
- We develop a dynamic model of platform economy where tokens serve as a means of payments among platform users and are issued to finance investment in platform productivity. Tokens are optimally issued to reward platform owners when the productivity-normalized token supply is low and burnt to boost the franchise value when the productivity-normalized normalized supply is high. Although token price is determined in a liquid market, the platform's financial constraint generates an endogenous token issuance cost, causing underinvestment through the conflict of interest between insiders (platform owners) and outsiders (users). Blockchain technology mitigates underinvestment by addressing the platform's time-inconsistency problem.
- Notes:
- Print version record
- September 2020.
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