Accompagnamento al Lavoro | Seminari e Convegni

Superstars in two-sided markets: exclusives or not?


Martedì 20 marzo, 2018 h. 15.00 (Aula dei consigli DISES)

Leonardo Madio (University of York)

Superstars in two-sided markets: exclusives or not?

"Video-games, music- and video-on-demand platforms, newspapers have often relied on exclusive contracts to capture additional consumers and compete with rivals. This paper studies exclusive dealing between platforms and a superstar generating additional value on the consumer side. We consider a game-theoretic model with competing platforms who act as intermediaries to consumers on one side and content providers on the other side. There are two types of content providers: a superstar and a mass of small content providers. We show that the superstar has an incentive to offer a take-or-leave-it exclusive contract whenever either the indirect network externalities generated by small content providers are sufficiently low or the downstream market for consumers is sufficiently competitive. We also identify the presence of a "ripple effect" which induces also other small content providers to sign exclusive contracts. Finally, we provide a welfare analysis showing that exclusive contracts may be welfare enhancing under some circumstances relative to the case where the superstar is absent and when she offers the contract to both platforms.