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Intellectual Property and Taxation in Digital Platforms

Author

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  • Juan Manuel Sanchez-Cartas

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.

Suggested Citation

  • Juan Manuel Sanchez-Cartas, 2019. "Intellectual Property and Taxation in Digital Platforms," Working Papers - Economics wp2019_02.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    • Handle: RePEc:frz:wpaper:wp2019_02.rdf
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    Cited by:

    1. is not listed on IDEAS
    2. Chenglei Xu & Shuxin Zhu & Boru Yang & Bin Miao & Yi Duan, 2023. "A Review of Policy Framework Research on Promoting Sustainable Transformation of Digital Innovation," Sustainability, MDPI, vol. 15(9), pages 1-26, April.
    3. Juan Manuel Sanchez‐Cartas & Gonzalo León, 2021. "Multisided Platforms And Markets: A Survey Of The Theoretical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 35(2), pages 452-487, April.
    4. J. Manuel Sanchez-Cartas, 2023. "Platform acquisitions, product imitation and openness," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(4), pages 765-780, December.
    5. Hans Jarle Kind & Guttorm Schjelderup, 2025. "Taxation and multi-sided platforms: a review," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 32(3), pages 895-915, June.

    More about this item

    Keywords

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    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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