Institute for Economic and Social Research

Seminar | Xinyu Hua, HKUST


Time: 2022/11/16Wed., 1500 – 1630 (Beijing Time)

Title: Holding Platforms Liable

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About the speaker:

Xinyu Hua obtained his Ph.D. degree from the Kellogg School of Management at Northwestern University. He is currently an associate professor of economics at HKUST. He also serves as an associate editor at the RAND Journal of Economics. His research interests include law and economics, and industrial organization. He has been working on topics such as strategic contracts, litigation/settlement, product liability, intellectual property rights, consumer data protection, etc. He has also provided consulting services for the anti-trust authority in China and some companies.


Should platforms be held liable for the harms suffered by users? A two-sided platform enables interactions between firms and users. There are two types of firms: harmful and safe. Harmful firms impose larger costs on the users. If firms have deep pockets then platform liability is unnecessary. Holding the firms liable for user harms deters the harmful firms from joining the platform. If firms are judgment proof then platform liability plays an instrumental role in reducing social costs. With platform liability, the platform has an incentive to (1) raise the interaction price to deter harmful firms and (2) invest resources to detect and remove harmful firms from the platform. The residual liability assigned to the platform may be partial instead of full. The optimal level of platform liability depends on whether users are involuntary bystanders or voluntary consumers, and the intensity of platform competition.


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