Abstract: Global crowdfunding has shown tremendous growth for the last couple of years. The startling rise of crowdfunding is drawing a high amount of interest in research as well as practice. How to design the optimal product and pricing decisions in a reward-based crowdfunding is an important question. Hu et al. (2015) developed a simple but elegant two-stage theoretical model and drew the conclusion that product line qualities are less differentiated in crowdfunding than in the traditional scenario under an optimal menu pricing strategy with the assumption that a high-type consumer always prefers low-price product if there is no risk of project failure. Their study commendably pointed at an important direction of research on crowdfunding for marketing scholars. However, the fact does not hold any more when product qualities are endogenized, because a high-type consumer can get either a larger or smaller surplus depending on the creator's offering and the market condition if there is no risk of project failure. Using a two-period theoretical model, the product line design is studied in sequential and simultaneous disclosure framework. The problem of product and pricing decisions in crowdfunding is revisited by fully incorporating individual rationality into a crowdfunding mechanism. It is found that in the sequential information strategy, qualities differentiation of the product line can be equally, less, or more differentiated in crowdfunding than in the traditional scenario, depending on the specific marketing conditions such as the heterogeneity of consumer and the proportion of high type consumers; in the simultaneous information strategy, the qualities differentiation will be always equal to the traditional scenario, surprisingly, the price gap in crowdfunding can be larger than in the traditional scenario, which means the entrepreneurs can set higher price in crowdfunding than traditional scenario even with the same product quality. It is also found that the simultaneous information strategy dominates the sequence information strategy in all market conditions because the former can decrease the propensity of free riding. With these new results, our findings provide important considerations for entrepreneurs to optimize their product line design and choose an optimal pricing policy in crowdfunding. The study contributes to not only the stream of product line decisions but also the growing literature on crowdfunding and sharing economy.

Key words: AON crowdfunding, product line design, quality, sequential disclosure, simultaneous disclosure