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Platform Liability and Innovation

Author

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  • Jeon, Doh-Shin
  • Lefouili, Yassine
  • Madio, Leonardo

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, platform liability increases innovation by reducing the competitive pressure faced by innovators. However, there can be a misalignment of interests between innovators and buyers. Furthermore, platform liability can have unintended consequences, which overturn the intended effect on innovation. Platform liability tends to increase (decrease) innovation and consumer welfare if the elasticity of participation of innovators is high (low) and that of buyers is low (high).

Suggested Citation

  • Jeon, Doh-Shin & Lefouili, Yassine & Madio, Leonardo, 2022. "Platform Liability and Innovation," TSE Working Papers 22-1361, Toulouse School of Economics (TSE), revised Feb 2024.
    • Handle: RePEc:tse:wpaper:127344
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    Cited by:

    1. Yassine Lefouili & Leonardo Madio, 2022. "The economics of platform liability," European Journal of Law and Economics, Springer, vol. 53(3), pages 319-351, June.
    2. Federico Etro, 2023. "e-Commerce Platforms and Self-preferencing," Working Papers - Economics wp2023_07.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    3. Martin Peitz, 2023. "Governance and Regulation of Platforms," CRC TR 224 Discussion Paper Series crctr224_2023_480, University of Bonn and University of Mannheim, Germany.
    4. Alessandro De Chiara & Juan-José Ganuza & Fernando Gómez & Ester Manna & Adrián Segura, 2023. "Platform Liability with Reputational Sanctions," Working Papers 1403, Barcelona School of Economics.
    5. Alessandro De Chiara & Ester Manna & Antoni Rubí-Puig & Adrian Segura-Moreiras, 2021. "Efficient copyright filters for online hosting platforms," Working Papers 21-03, NET Institute.
    6. Leonardo Madio, 2023. "Content Moderation and Advertising in Social Media Platforms," "Marco Fanno" Working Papers 0297, Dipartimento di Scienze Economiche "Marco Fanno".
    7. Jay Pil Choi & Doh-Shin Jeon, 2022. "Platform Design Biases in Ad-Funded Two-Sided Markets," Post-Print hal-04018490, HAL.

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    More about this item

    Keywords

    Platform; Liability; Intellectual Property; Innovation.;
    All these keywords.

    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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