Superstar exclusivity in two-sided markets

We study the welfare impact of exclusive input provision by a premium player (Superstar) to platforms facilitating interactions between consumers and firms. When platform competition is intense, more consumers affiliate with the platform favored by exclusivity. This mechanism is self-reinforcing as more firms follow consumer decisions and some singlehome on the platform with the Superstar. We find that the presence of cross-group externalities is key in shaping market outcomes. First, exclusivity can be welfare-enhancing. Second, vertical integration (platform-Superstar) may make exclusivity (input foreclosure) less likely than vertical separation.