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Superstars, Economics of

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Abstract

Gigantic incomes and rare talents attract attention and elicit a search for an explanation. Sherwin Rosen has provided us with an elegant neoclassical model whose market equilibrium is characterized by a superstar. Given a fixed cost of consumption, customers flock to talented sellers. If there are no costs of production, the most talented seller becomes a superstar. Discrete gaps in the talent distribution allow less talented sellers to survive but they must charge lower prices. A competitive market equilibrium thus exhibits a skewed distribution of earnings and outputs.

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  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Walter Y. Oi

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  1. Walter Y. Oi
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Oi, W.Y. (2018). Superstars, Economics of. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2772

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