Working paper

Superstars in two-sided markets: exclusives or not?

Elias Carroni, Leonardo Madio, and Shiva Shekhar

Abstract

This article studies incentives for a premium provider (Superstar) to offer exclusive contracts to competing platforms mediating the interactions between consumers and firms. When platform competition is intense, more consumers affiliate with the platform favored by Superstar’s exclusive deal. This mechanism is self-reinforcing as more firms follow consumer decisions and some singlehome on the favored platform. Our model shows that the presence of indirect network externalities may overturn the common conclusion in the one-sided literature that exclusivity could be deemed as anti-competitive. Exclusivity can be welfare-enhancing and a vertical merger (platform-Superstar) may make non-exclusivity more likely than if the Superstar was independent.

Keywords

exclusive contracts; platforms; two-sided markets; marquee player;

JEL codes

  • L13: Oligopoly and Other Imperfect Markets
  • L22: Firm Organization and Market Structure
  • L86: Information and Internet Services • Computer Software
  • K21: Antitrust Law

Reference

Elias Carroni, Leonardo Madio, and Shiva Shekhar, Superstars in two-sided markets: exclusives or not?, TSE Working Paper, n. 20-1083, March 2020.

See also

Published in

TSE Working Paper, n. 20-1083, March 2020