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Superstardom and Monopolistic Power: Why Media Stars Earn More Than Their Marginal Contribution to Welfare

Lex Borghans and Loek Groot ()

Journal of Institutional and Theoretical Economics (JITE), 1998, vol. 154, issue 3, 546-

Abstract: In this paper we develop in two steps an argument which shows that superstar incomes exceed their marginal contribution to welfare. Firstly, we argue that superstar incomes can only exist if two conditions are met: There should indeed be differences in talent; but also superstars must be able to exploit monopolistic power due to their number-one position. Secondly, we introduce an elementary probabilistic model that shows that the existence of such monopolistic power explains the stylized facts concerning superstars, while the presumption that high incomes are completely generated by differences in talent, is rejected by this model.

JEL-codes: D62 J31 (search for similar items in EconPapers)
Date: 1998
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