December 12, 2018
12:45 p.m.
CORE, room C035
Superstars in Two-Sided Markets: Exclusives or Not?
Shiva Shekhar, Compass Lexecon
Competition in many markets is shaped by the presence of Superstars, i.e., very strong players who can decide to offer their product through exclusive contracts. In this paper, we present a tractable model of two-sided platform competition. Platforms act as intermediaries between consumers and content providers. Relative to other content providers, a Superstar is more important for consumers and has market power. When platform competition is intense, consumers are very responsive to the presence of the Superstar. This makes exclusivity more lucrative. Differently, when competition is less intense, consumers tend to stick with their preferred platform. So, the Superstar offers a non-exclusive contract reaching the largest possible audience. This mechanism is self-reinforcing as content providers endogenously fol- low consumer decisions and it is robust to more general set-ups and extensions. Contrary to the common wisdom, in most cases the contract choice of the Superstar is aligned with the first-best outcome in the industry.
(joint work with Elias Carroni (University of Bologna) and Leonardo Madio (CORE))
(joint work with Elias Carroni (University of Bologna) and Leonardo Madio (CORE))
One version of the paper is also available here: https://www.ssrn.com/abstract=3243777
Please fill the doodle by Tuesday Dec 11 at noon if you plan to attend and mention whether you would like a sandwich:
https://doodle.com/poll/xg9zecmrda8xtmtz
Remember to bring your own cup if you would like to have some water.
Looking forward to seeing you all in the seminar!
ps: If you want to present your work, please contact us. Find the calendar here.
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