Superstars in Two-Sided Markets: Exclusives or Not?

53 Pages Posted: 24 Sep 2018 Last revised: 4 Nov 2019

See all articles by Elias Carroni

Elias Carroni

University of Bologna - Department of Economics

Leonardo Madio

University of Toulouse 1 - Toulouse School of Economics (TSE); CESifo (Center for Economic Studies and Ifo Institute)

Shiva Shekhar

University of Düsseldorf - Düsseldorf Institute for Competition Economics (DICE)

Multiple version iconThere are 2 versions of this paper

Date Written: November 1, 2019

Abstract

This article studies incentives for a premium provider (Superstar) to offer exclusive contracts to competing platforms mediating the interactions between consumers and firms. When platform competition is intense, more consumers affiliate with the platform favored by Superstar exclusivity. This mechanism is self-reinforcing as firms follow consumer decisions and some join the favored platform only. Exclusivity always benefits firms and might eventually benefit consumers. A vertical merger (platform-Superstar) makes non-exclusivity more likely than if the Superstar was independent. The analysis provides novel insights for managers and policymakers and it is robust to several variations and extensions.

Keywords: exclusive contracts, platforms, two-sided markets, market power

JEL Classification: L13, L22, L86, K21

Suggested Citation

Carroni, Elias and Madio, Leonardo and Shekhar, Shiva, Superstars in Two-Sided Markets: Exclusives or Not? (November 1, 2019). Available at SSRN: https://ssrn.com/abstract=3243777 or http://dx.doi.org/10.2139/ssrn.3243777

Elias Carroni

University of Bologna - Department of Economics ( email )

Bologna
Italy

HOME PAGE: http://https://sites.google.com/site/eliascarroninuoro/

Leonardo Madio (Contact Author)

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France
31000 (Fax)

HOME PAGE: http://www.leonardomadio.eu

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Shiva Shekhar

University of Düsseldorf - Düsseldorf Institute for Competition Economics (DICE)

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