Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/338266 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 9984
Version Description: 
This Version: November 2025
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
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.
Subjects: 
platform
liability
intellectual property
innovation
JEL: 
K40
K42
K13
L13
L22
L86
Document Type: 
Working Paper
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