Paper published in Management Science

Authors:
Elias Carroni, University of Bologna
Leonardo Madio, Department of Economics and Management, University of Padua
Shiva Shekhar, Tillburg School of Economics and Management

In this paper, the authors study the incentives of Superstars to sign exclusive contracts with two-sided platforms and their welfare effects. They examine how this decision affects not only users but also other complementors who are less famous, such as other artists or videogamers. Their analysis takes into account the fact that platform environments are characterized by the interaction between two sides of the market. Additionally, they investigate whether, following a vertical merger between a platform and Superstar, the merging party has a higher or lower incentive to provide Superstar content to a rival platform.
Their research reveals that Superstar exclusivity is more likely to emerge when platform competition is particularly fierce and can have a positive impact on consumers when they place a high value on the presence of complementors. In such cases, the benefit of a consumer accessing Superstar content outweighs the negative impact on consumers who don't have access to it because they patronize a competing platform.
Moreover, they also find that a merger may make exclusivity less likely post-merger relative to the pre-merger case. Finally, they discuss implications for the strategies of platform owners, managers of superstars and complementors, and antitrust enforcers.

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