Superstar Exclusivity in Two-Sided Markets
No 296, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"
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-Ã -vis rivals. In this article, we study the impact of Superstar exclusive content provi- sion on platform competition and complementorsâ€™ 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 con- ventional 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)
Pages: 87 pages
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic, nep-pay and nep-reg
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Working Paper: Superstar Exclusivity in Two-Sided Markets (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pad:wpaper:0296
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