Superstar exclusivity in two-sided markets

86 Pages Posted: 24 Sep 2018 Last revised: 25 May 2024

See all articles by Elias Carroni

Elias Carroni

University of Bologna - Department of Economics

Leonardo Madio

University of Padua - Department of Economics and Management; CESifo (Center for Economic Studies and Ifo Institute)

Shiva Shekhar

Compass Lexecon; Tilburg University - Tilburg University School of Economics and Management; Tilburg Law and Economics Center (TILEC)

Multiple version iconThere are 2 versions of this paper

Date Written: November 22, 2022

Abstract

In most platform environments, the exclusive provision of premium content from leading creators (Superstars) is employed as a strategy to boost user participation and secure a competitive edge vis-à-vis rivals. In this article, we study the impact of Superstar exclusive content provision on platform competition and complementors' homing decisions. Two competing platforms facilitate interactions between consumers and suppliers, the latter of which are identified by the Superstar and a fringe of complementors (e.g., independent developers, amateurs). When platform competition is intense, more consumers affiliate with the platform favored by Superstar exclusivity. This mechanism is self-reinforcing as it generates an entry cascade of complementors, and some complementors singlehome on the favored platform. We find that the presence of cross-group externalities is key in shaping market outcomes. First, exclusivity benefits complementors and might make consumers better off when cross-group externalities are large enough. Second, contrary to common wisdom, vertical integration (platform-Superstar) may make exclusivity less likely than vertical separation under reasonable conditions. Finally, we discuss implications for the strategies of platform owners, managers of Superstars and complementors, and antitrust enforcers.

Keywords: exclusivity, platforms, two-sided markets, vertical integration, network ex- ternalities.

JEL Classification: L13, L22, L86, K21

Suggested Citation

Carroni, Elias and Madio, Leonardo and Shekhar, Shiva and Shekhar, Shiva, Superstar exclusivity in two-sided markets (November 22, 2022). 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://sites.google.com/site/eliascarroninuoro/

Leonardo Madio (Contact Author)

University of Padua - Department of Economics and Management ( email )

Via del Santo, 33
Padova, 35123
Italy

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

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

Poschinger Str. 5
Munich, DE-81679
Germany

Shiva Shekhar

Compass Lexecon ( email )

United States

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
920
Abstract Views
4,105
Rank
35,415
PlumX Metrics