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Substitution and superstars

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  • Perri, Timothy

Abstract

The existing superstar model (Rosen, 1981) does not require imperfect substitutes, and the convexity of total earnings with respect to talent is due to greater output for those with more talent. Our model explains why wages would increase at an increasing rate in talent. Imperfect substitutability between non-superstars and superstars with probabilistic production results in convexity in wage rates.

Suggested Citation

  • Perri, Timothy, 2014. "Substitution and superstars," Economics Letters, Elsevier, vol. 125(2), pages 240-242.
    • Handle: RePEc:eee:ecolet:v:125:y:2014:i:2:p:240-242
    DOI: 10.1016/j.econlet.2014.08.032
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    References listed on IDEAS

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    1. Rosen, Sherwin, 1983. "The Economics of Superstars: Reply," American Economic Review, American Economic Association, vol. 73(3), pages 460-462, June.
    2. 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 546-546, September.
    3. 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.
    4. Timothy Perri, 2013. "A Competitive Model of (Super)Stars," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 39(3), pages 346-357.
    5. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-858, December.
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    More about this item

    Keywords

    Superstars; Imperfect substitutes; Convex wages;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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