Superstardom and Monopolistic Power: Why Media Stars Earn More Than Their Marginal Contribution to Welfare
AbstractIn this paper we develop in two steps an argument which shows that superstar incomes exceed their marginal contribution to welfare. Firstly, we argue that superstar incomes can only exist if two conditions are met: There should indeed be differences in talent; but also superstars must be able to exploit monopolistic power due to their number-one position. Secondly, we introduce an elementary probabilistic model that shows that the existence of such monopolistic power explains the stylized facts concerning superstars, while the presumption that high incomes are completely generated by differences in talent, is rejected by this model.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 154 (1998)
Issue (Month): 3 (September)
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- D62 - Microeconomics - - Welfare Economics - - - Externalities
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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- Egon Franck & Stephan Nüesch, 2006. "Explaining the Star Shift in the Media– Why “Manufactured” Celebrities are More Lucrative than “Self-Made” Superstars," Working Papers 0057, University of Zurich, Institute for Strategy and Business Economics (ISU).
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- Timothy Perri, 2011. "Substitution and Superstars," Working Papers 11-14, Department of Economics, Appalachian State University.
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