Strict liability increases innovation in compliance technology
Yassine Lefouili and Leonardo Madio, 2022 - *Toulouse School of Economics, University of Toulouse Capitole, Toulouse, France AND **Department of Economics and Management, University of Padua, Padua, Italy “The economics of platform liability” Eur J Law Econ. 2022; 53(3): 319–351. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8857911/ //DH
Third, the degree of stringency of the liability regime that platforms are subject to may also affect the “direction” of innovation, i.e., platforms’ choice between different types of innovations. More specifically, a (more) stringent liability rule is likely to make platforms favor (more) innovations leading to services and functionalities that do not entail high liability costs for them and innovations that reduce liability costs associated with the services offered by the platform. Whether such a distortion in the direction of innovation is socially desirable is an open question.