Protectionism and platform revenues

Massimo Morelli, Gianmarco I. P. Ottaviano and Tommaso Sonno

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: The Arab Spring made evident the dangers of democratization of information for incumbent governments, prompting regulatory changes that helped digital platforms gain power. We document a set of political favors (tariff sparing) for US tech manufacturing in 2018, but the rise of platform revenues does not depend on such favors: digital platforms may benefit from tariffs even when they are not protected and their customers are not protected. In an open economy with ad valorem commissions on the tariff-inclusive consumer price, platform revenue rises with the tariff if and only if demand elasticity is below one in absolute value.

Date: 2026-07-08
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