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A Competitive Model of (Super)Stars

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  • Timothy Perri

    ()
    (Department of Economics, Appalachian State University, Boone, NC, 28608, USA.)

Abstract

Following Rosen [1981], superstar effects (earnings convex in quality and a few firms reaping a large share of market earnings) occur with imperfect substitution between sellers, low (and possibly declining) marginal cost of output, and marginal cost falling as quality increases. However, markets without such characteristics have superstar effects, and the main result from the superstar model — small quality differences result in large earnings differences — may not hold. A competitive model can yield superstar effects when a few firms have quality significantly higher than others and cost increases in output, provided cost does not increase too rapidly in quality.

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Eastern Economic Journal.

Volume (Year): 39 (2013)
Issue (Month): 3 ()
Pages: 346-357

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Handle: RePEc:pal:easeco:v:39:y:2013:i:3:p:346-357

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  1. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  2. Hamlen, William A, Jr, 1991. "Superstardom in Popular Music: Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 729-33, November.
  3. Victor Ginsburgh & David Throsby, 2006. "Handbook of the economics of art and culture," ULB Institutional Repository 2013/1673, ULB -- Universite Libre de Bruxelles.
  4. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-58, December.
  5. Felix Oberholzer-Gee & Koleman Strumpf, 2007. "The Effect of File Sharing on Record Sales: An Empirical Analysis," Journal of Political Economy, University of Chicago Press, vol. 115, pages 1-42.
  6. Lex Borghans & Loek Groot, 1998. "Superstardom and Monopolistic Power: Why Media Stars Earn More Than Their Marginal Contribution to Welfare," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 154(3), pages 546-, September.
  7. Hausman, Jerry A & Leonard, Gregory K, 1997. "Superstars in the National Basketball Association: Economic Value and Policy," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 586-624, October.
  8. Sorensen, Alan T., 2004. "Bestseller Lists and Product Variety: The Case of Book Sales," Research Papers 1878, Stanford University, Graduate School of Business.
  9. Rosen, Sherwin, 1983. "The Economics of Superstars: Reply," American Economic Review, American Economic Association, vol. 73(3), pages 460-62, June.
  10. Alan B. Krueger, 2005. "The Economics of Real Superstars: The Market for Rock Concerts in the Material World," Journal of Labor Economics, University of Chicago Press, vol. 23(1), pages 1-30, January.
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Cited by:
  1. Timothy Perri, 2011. "Substitution and Superstars," Working Papers 11-14, Department of Economics, Appalachian State University.

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