Platform Liability with Reputational Sanctions

Ester Manna, Alessandro De Chiara, Fernando Gómez and Juan-José Ganuza

No 1403, Working Papers from Barcelona School of Economics

Abstract: This paper presents a framework where sellers, an online platform with monopoly power, and consumers transact. We aim to study the interaction between the imposition of liability on the platform, the reputational sanctions exerted by consumers, and the internal measures adopted by the platform to keep in check the sellers, whenever a product generates losses to consumers. We show that introducing direct legal liability of the platform may have both positive and negative effects for safety investments. Additionally, when sellers are heterogeneous (with respect to their sensitivity to the sanctions from consumers or from the platform), legal liability on the platform will have an impact on the selection of participating sellers, although the sign and size of the effect largely depend on paremeter values.

Keywords: reputation; platform liability; third-party sellers (search for similar items in EconPapers)
JEL-codes: K13 L15 L51 (search for similar items in EconPapers)
Date: 2023-09
New Economics Papers: this item is included in nep-law and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Platform liability with reputational sanctions (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:1403

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