Intellectual Property and Taxation in Digital Platforms

J. Manuel Sánchez-Cartas

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: I study the impact of competition and taxation on the openness and the intellectual property policies of two-sided digital platforms. I model a market in which two platforms compete for users and developers. First, I find that higher competition shortens the period of exclusivity granted to developers but does not influence the degree of openness of a platform. However, the higher the degree of differentiation in the developers market, the less open the platforms are. Second, I analyze two types of taxes, ad valorem and unit taxes. Ad-valorem taxes have no effect on the length of the exclusivity period. However, they increase the degree of openness of the platform when levied on users. Unit taxes instead limit the degree of openness and increase the period of exclusivity when levied on the developers market. Lastly, I find that multi-homing reduces the exclusivity period, but does not change the qualitative effects of taxation. My findings suggest that the new digital tax proposed by the European Commission, that should come into force in 2020, may reduce openness and innovation levels in the European Union.

Keywords: Two-sided markets; Digital Platforms; Taxation; Intellectual Property; Openness (search for similar items in EconPapers)
JEL-codes: H22 L13 L51 L86 O34 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2019
New Economics Papers: this item is included in nep-com, nep-ipr, nep-law, nep-pay, nep-pbe and nep-pub
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Journal Article: Intellectual property and taxation of digital platforms (2021)
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