Superstars in two-sided markets: exclusives or not? Elias Carroni∗ Leonardo Madio† Shiva Shekhar‡ This version: July, 2020 This article studies incentives for a premium provider (Superstar) to offer exclu- sive contracts to competing platforms mediating the interactions between consumers and firms. When platform competition is intense, more consumers affiliate with the platform favored by Superstar’s exclusive deal. This mechanism is self-reinforcing as more firms follow consumer decisions and some singlehome on the favored platform. Our model shows that the presence of indirect network externalities may overturn the common conclusion in the one-sided literature that exclusivity could be deemed as anti-competitive. Exclusivity can be welfare-enhancing and a vertical merger (platform-Superstar) may make non-exclusivity more likely than if the Superstar was independent. JEL Classification: L13, L22, L86, K21. Keywords: exclusive contracts, platforms, two-sided markets, marquee player. ∗Dipartimento di Scienze Economiche - Alma Mater Studiorum - Università di Bologna - 1, Piazza Scaravilli, 40126 Bologna, Italy. email:
[email protected]. †Toulouse School of Economics, University of Toulouse Capitole, 1, Esplanade de l’université, Toulouse, France. email:
[email protected]. Also affiliated with CESifo. ‡Compass Lexecon, Square de Meeus 23, Brussels, Belgium. email:
[email protected]. This is an independent piece of research and is not necessarily the view of Compass Lexecon. This version supersedes and generalizes a previous version