Superstars in Two-Sided Markets: Exclusives or Not?

28 Pages Posted: 24 Sep 2018 Last revised: 27 Feb 2019

See all articles by Elias Carroni

Elias Carroni

University of Bologna - Department of Economics

Leonardo Madio

CORE, Universitè Catholique de Louvain

Shiva Shekhar

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

Multiple version iconThere are 2 versions of this paper

Date Written: February 24, 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 subscribe to the platform hosting the Superstar exclusively. This mechanism is self-reinforcing as firms follow consumer decisions and (some) join exclusively the platform with the Superstar. Exclusivity always benefits firms and may benefit consumers. Moreover, when the Superstar is integrated with a platform, non-exclusivity becomes more likely than if the Superstar was independent. This analysis provides several implications for managers and policy makers operating in digital and traditional markets.

Keywords: exclusive contracts, platforms, two-sided markets, ripple effect, content providers, market power.

JEL Classification: L13, L22, L86

Suggested Citation

Carroni, Elias and Madio, Leonardo and Shekhar, Shiva, Superstars in Two-Sided Markets: Exclusives or Not? (February 24, 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)

CORE, Universitè Catholique de Louvain ( email )

Voie du Roman Pays 34, bte B.038 L1.03.01
Louvain-La-Neuve, 1348
Belgium

HOME PAGE: http://https://sites.google.com/view/leonardomadio/home

Shiva Shekhar

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

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