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Platform Liability and Innovation

Doh-Shin Jeon (), Yassine Lefouili and Leonardo Madio

No 22-1361, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We study a platform’s incentives to delist IP-infringing products and the effects of holding the platform liable for the presence of such products on innovation and consumer welfare. For a given number of buyers on the platform, platform liability increases innovation by reducing the competitive pressure that innovative products face from IP-infringing products. However, platform liability can have unintended consequences, which can overturn this intended effect on innovation. Moreover, there can be a misalignment of interests between innovators and buyers as platform liability reduces consumer surplus for a given number of innovators. We also analyze how different types of cross-group network effects affect the impact of platform liability on innovation and consumer welfare.

Keywords: Platform; Liability; Intellectual Property; Innovation. (search for similar items in EconPapers)
JEL-codes: K13 K40 K42 L13 L86 (search for similar items in EconPapers)
Date: 2022-09-19
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino, nep-law, nep-mic, nep-pay, nep-reg and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:127344

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