The Macroeconomics of Superstars[1]
>Abstract
>Recent technological changes have transformed an increasing number of sectors of the economy into so-called superstars sectors, in which a small number of entrepreneurs or professionals distribute their output widely to the rest of the economy. Examples include the high-tech sector, sports, the music industry, management, fnance, etc. As a result, these superstars reap enormous rewards, whereas the rest of the workforce lags behind. We describe superstars as arising from digital innovations, whicih replace a fraction of the tasks in production with information technology that requires a fxed cost but can be reproduced at zero marginal cost. This generates a form of increasing returns to scale. To the extent that the digital innovations are excludable, it also provides the innovator with market power. Our paper studies the implications of superstar technologies for factor shares, for inequality and for the effciency properties of the superstar economy.
[1] The Macroeconomics of Superstars, Anton Korinek Johns Hopkins and NBER, Ding Xuan Ng Johns Hopkins, November 2017 https://www.imf.org/~/media/Files/Conferences/2017-stats-for...
[2] The Economics of Superstars The American Economic Review , Vol. 71, No. 5. (Dec., 1981), pp. 845-858. http://www.uvm.edu/pdodds/files/papers/others/1981/rosen1981...