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Superstardom and Monopolistic Power: Why Media Stars Earn More Than Their Marginal Contribution to Welfare

Author

Listed:
  • Lex Borghans
  • Loek Groot

Abstract

In 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.

Suggested Citation

  • 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.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(199809)154:3_546:sampwm_2.0.tx_2-p
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    Citations

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    Cited by:

    1. Brinja Meiseberg, 2014. "Trust the artist versus trust the tale: performance implications of talent and self-marketing in folk music," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 38(1), pages 9-42, February.
    2. repec:hal:journl:halshs-00971782 is not listed on IDEAS
    3. Lutter, Mark, 2012. "Soziale Strukturen des Erfolgs: Winner-take-all-Prozesse in der Kreativwirtschaft," MPIfG Discussion Paper 12/7, Max Planck Institute for the Study of Societies.
    4. Egon Franck & Stephan Nüesch, 2012. "Talent And/Or Popularity: What Does It Take To Be A Superstar?," Economic Inquiry, Western Economic Association International, vol. 50(1), pages 202-216, January.
    5. Luc Champarnaud, 2014. "Prices for superstars can flatten out," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 38(4), pages 369-384, November.
    6. Wladimir Andreff, 2014. "The Winner's Curse in Sports Economics," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01243890, HAL.
    7. Francesco Angelini & Massimiliano Castellani, 2017. "Cultural and economic value: A (p)review," Working Paper series 17-10, Rimini Centre for Economic Analysis, revised Jan 2018.
    8. Nela Filimon & Jordi López-Sintas & Carlos Padrós-Reig, 2011. "A test of Rosen’s and Adler’s theories of superstars," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 35(2), pages 137-161, May.
    9. Günther G. Schulze, 2011. "Superstars," Chapters,in: A Handbook of Cultural Economics, Second Edition, chapter 56 Edward Elgar Publishing.
      • Günther G. Schulze, 2003. "Superstars," Chapters,in: A Handbook of Cultural Economics, chapter 54 Edward Elgar Publishing.
    10. Borghans L. & Weel B. ter, 2000. "How computerizaton changes the UK Labour Market: The Facts viewed from a new Perspective," ROA Working Paper 010, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    11. Connolly, Marie & Krueger, Alan B., 2006. "Rockonomics: The Economics of Popular Music," Handbook of the Economics of Art and Culture, Elsevier.
    12. Timothy Perri, 2013. "A Competitive Model of (Super)Stars," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 39(3), pages 346-357.
    13. Giles, David E., 2006. "Superstardom in the US popular music industry revisited," Economics Letters, Elsevier, vol. 92(1), pages 68-74, July.
    14. Wladimir Andreff, 2014. "Building Blocks for a Disequilibrium Model of a European Team Sports League," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00971782, HAL.
    15. Marie Connolly & Alan Krueger, 2005. "Rockonomics: The Economics of Popular Music," Working Papers 878, Princeton University, Department of Economics, Industrial Relations Section..
    16. Perri, Timothy, 2014. "Substitution and superstars," Economics Letters, Elsevier, vol. 125(2), pages 240-242.
    17. Harashima, Taiji, 2017. "The Mechanism behind Product Differentiation: An Economic Model," MPRA Paper 81522, University Library of Munich, Germany.
    18. Budzinski, Oliver & Pannicke, Julia, 2017. "Does popularity matter in a TV song competition? Evidence from a national music contest," Ilmenau Economics Discussion Papers 106, Ilmenau University of Technology, Institute of Economics.
    19. Borgmans, Lex & Weel, Bas ter, 2000. "How computerization changes the UK labour market: The facts viewed from a new perspective," Research Memorandum 025, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    20. repec:hal:journl:halshs-01243890 is not listed on IDEAS
    21. 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).
    22. Harashima, Taiji, 2016. "Ranking Value and Preference: A Model of Superstardom," MPRA Paper 74626, University Library of Munich, Germany.
    23. Daniel Hoegele & Sascha L. Schmidt & Benno Torgler, 2016. "The importance of key celebrity characteristics for customer segmentation by age and gender: Does beauty matter in professional football?," Review of Managerial Science, Springer, vol. 10(3), pages 601-627, July.
    24. Elmer Sterken, 2014. "Collective Memory and Nostalgia in The Dutch Radio2 Top2000 Chart 1999-2013," CESifo Working Paper Series 4632, CESifo Group Munich.

    More about this item

    JEL classification:

    • 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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