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A Competitive Model of (Super)Stars

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  • Timothy Perri

Abstract

The usual explanations for superstar effects---when a firm’s revenue is positive and convex in quality, and a few firms earn a large share of market revenue---are imperfect substitution between sellers, low marginal cost of output, and marginal cost declining as quality increases. Herein, a competitive model is developed in which superstar effects occur simply because a few firms have quality significantly higher than others. No firm needs to sell more than a small percentage of market output, and cost can increase in output and in quality (the latter possibly at no more than a decreasing rate).

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File URL: http://econ.appstate.edu/RePEc/pdf/wp0409.pdf
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Paper provided by Department of Economics, Appalachian State University in its series Working Papers with number 04-09.

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Date of creation: 2004
Date of revision: 2005
Handle: RePEc:apl:wpaper:04-09

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Web page: http://www.business.appstate.edu/departments/economics/
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  1. Sorensen, Alan T., 2004. "Bestseller Lists and Product Variety: The Case of Book Sales," Research Papers 1878, Stanford University, Graduate School of Business.
  2. Victor Ginsburgh & David Throsby, 2006. "Handbook of the economics of art and culture," ULB Institutional Repository 2013/1673, ULB -- Universite Libre de Bruxelles.
  3. 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.
  4. Rosen, Sherwin, 1983. "The Economics of Superstars: Reply," American Economic Review, American Economic Association, vol. 73(3), pages 460-62, June.
  5. 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.
  6. 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..
  7. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-58, December.
  8. 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.
  9. 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.
  10. 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.
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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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