Section 230 and the Problem of Social Cost

December 1, 2021

This article employs, with certain modifications, the framework developed in Ronald Coase’s classic article, “The Problem of Social Cost,” to analyze the current debate over Section 230 of the Communications Decency Act.


In this article published in the Journal of Law and Policy, authors Stanley M. Besen and Philip L. Verveer draw on Coase’s insights to examine the current debate over possible amendments to Section 230 of the Communications Decency Act, the provision that affords digital platforms such as Facebook, Twitter, and YouTube very substantial immunity from liability for the harmful effects of the content that they provide to their users. Given current concerns about the costs and benefits of Section 230, we believe that an “economic” approach can shed new light on the kinds of revisions to the Section that might improve its operation. We consider whether applying Coase’s insights could produce adjustments to Section 230 that would lead to reductions in the negative externalities that result from harmful materials that are distributed over “interactive communications services.”

We conclude, consistent with Coase, that some expansion of platform liability would likely improve deterrence based on individual effort, but that enabling government civil prosecution of claims based on expanded liability would usefully supplement individual initiative.


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