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Platform Liability and Innovation

Author

Listed:
  • Doh-Shin Jeon

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Yassine Lefouili

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Leonardo Madio

    (Unipd - Università degli Studi di Padova = University of Padua)

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, innovators, imitators, and buyers—are worse off. We also provide a sufficient condition under which platform liability raises total welfare.

Suggested Citation

  • Doh-Shin Jeon & Yassine Lefouili & Leonardo Madio, 2026. "Platform Liability and Innovation," Working Papers hal-05375721, HAL.
    • Handle: RePEc:hal:wpaper:hal-05375721
    Note: View the original document on HAL open archive server: https://hal.science/hal-05375721v1
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