Work

Holding Platforms Liable

Year: 2025

Type: article

Abstract: Should platforms be liable for harms suffered by users? A platform enables interactions between firms and users. Harmful firms impose larger costs on users than safe firms. If firms have deep pockets and are fully liable for harms, platform liability is unnecessary. If firms have limited liability, holding platforms liable for residual harm increases platforms' incentives to raise interaction prices and invest in auditing to deter, detect, and block harmful firms. The social desirability and optimal level of platform liability depend on whether interactions require user consent, the degree to which users internalize harms, and the observability of platform effort. (JEL D21, K13, K22, L81, L82, L86)

Source: American Economic Journal Microeconomics

DOI: 10.1257/mic.20230282

Authors: Xinyu Hua, Kathryn E. Spier

Institutions: Hong Kong University of Science and Technology, National Bureau of Economic Research, Harvard University

Language: English

Topic: Digital Platforms and Economics

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

OpenAlex ID: W4415619345

FWCI: 4.426

Cites: 69

Cited by: 16

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