Superstar Exclusivity in Two-Sided Markets

Elias Carroni

No 296, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

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 provi- sion 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 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
Date: 2023-01
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic, nep-pay and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Superstar Exclusivity in Two-Sided Markets (2024)
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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