Superstardom and monopolistic power: why media stars earn more than their marginal contribution to welfare

Article Abstract:

The high income of superstars is a phenomena of the late 20th century, with the best pop musicians, actors and directors being able to command record-breaking fees. However, lack of empirical data makes it unclear whether the number and career length of superstars is falling or rising. A new study shows that superstars' marginal contribution to welfare is lower than their incomes by arguing that such incomes exist only if superstars have a certain monopolistic power and differences in talent. The model rejects the argument that high incomes are wholly generated by talent differences.

Monopolistic competition

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Small heterogeneous cartels

Article Abstract:

Rarely do economic theories provide consistent demonstrations of the existence of stable cartels, although two theoretical models exist to explain the phenomenon, including the model initiated by D'Aspremont, Jacquemin, Gabszewicz and Weymark (AJGW). A new study offers some generalizations over the AJGW approach of stable cartels in small markets. It is shown that cartel sizes fall with the total number of suppliers in the market, while changing demand can have an uncertain effect on cartel size.

Economic aspects, Cartels, Industrial organization

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