Superstar Exclusivity in Two-Sided Markets

Elias Carroni, Leonardo Madio and Shiva Shekhar

No 7535, CESifo Working Paper Series from CESifo

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, of which the latter are identified by the Superstar and a fringe of complementors (e.g., independent developers, amateurs). When platform competition is intense, more consumers become affiliated 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 cross-group externalities are 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 conventional 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 externalities (search for similar items in EconPapers)
JEL-codes: K21 L13 L22 L86 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-com, nep-cta, nep-cul, nep-ict, nep-ind, nep-mic and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Superstar Exclusivity in Two-Sided Markets (2024)
Working Paper: Superstar Exclusivity in Two-Sided Markets (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7535

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