Superstar exclusivity in two-sided markets

52 Pages Posted: 24 Sep 2018 Last revised: 21 Jan 2021

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

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

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Date Written: January 20, 2021

Abstract

We study the welfare impact of exclusive input provision by a premium player (Superstar) to platforms facilitating interactions between consumers and firms. When platform competition is intense, more consumers affiliate with the platform favored by exclusivity. This mechanism is self-reinforcing as more firms follow consumer decisions and some singlehome on the platform with the Superstar. We find that the presence of cross-group externalities is key in shaping market outcomes. First, exclusivity can be welfare-enhancing. Second, vertical integration (platform-Superstar) may make exclusivity (input foreclosure) less likely than vertical separation.

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, Superstar exclusivity in two-sided markets (January 20, 2021). 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 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

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

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