Platform Liability and Innovation

Doh-Shin Jeon, Yassine Lefouili and Leonardo Madio ()
Additional contact information
Leonardo Madio: Department of economics and management ”Marco Fanno”, University of Padova and CESifo

No 285, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: We study a platform’s incentives to remove IP-infringing products and the effects of holding the platform liable for such infringements on innovation and welfare. We first show that platform liability can lead to either higher or lower commission rates, depending on how screening affects transaction volume. We then show that liability may spur or hinder innovation, depending on the intensity of cross-group network externalities. A sufficient condition for platform liability to reduce total welfare is that it lowers innovation, in which case all market participants–the platform, inno- vators, imitators, and buyers—are worse off. We also provide a sufficient condition under which platform liability raises total welfare.

Keywords: platform; liability; intellectual property; innovation (search for similar items in EconPapers)
JEL-codes: K13 K40 K42 L13 L22 L86 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2025-11
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino, nep-law, nep-mic, nep-pay and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Platform Liability and Innovation (2025)
Working Paper: Platform Liability and Innovation (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0285

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