Thank you! I think that’s getting closer to what I’m thinking. But it isn’t quite the same thing.
The superstar effect seems to be explaining a phenomena, whereas I’m trying to make an argument as to how resources can be allocated most efficiently. The superstar effect says, “you see these high salaries among, say singers, because technology has enabled them to reach large audiences, and technology has enabled consumers to easily listen to the best singers” (please correct me if my understanding is flawed).
I’m trying to do something similar, but from what I understand, slightly different. I’m trying to answer the question, “Why is this more efficient? Why is there an opportunity for firms to create and capture value?”.
I sense that equilibrium is a relevant concept. You invest in the resource until the marginal benefit is ⇐ the marginal cost. Investing into a resource that serves a large market has a large marginal benefit because the effects are multiplied by the size of the market.
Edit: I spent the whole day thinking about it and at some point the thoughts started flowing, so I wrote up a post. Thanks again for referring me to The Superstar Effect!
Thank you! I think that’s getting closer to what I’m thinking. But it isn’t quite the same thing.
The superstar effect seems to be explaining a phenomena, whereas I’m trying to make an argument as to how resources can be allocated most efficiently. The superstar effect says, “you see these high salaries among, say singers, because technology has enabled them to reach large audiences, and technology has enabled consumers to easily listen to the best singers” (please correct me if my understanding is flawed).
I’m trying to do something similar, but from what I understand, slightly different. I’m trying to answer the question, “Why is this more efficient? Why is there an opportunity for firms to create and capture value?”.
I sense that equilibrium is a relevant concept. You invest in the resource until the marginal benefit is ⇐ the marginal cost. Investing into a resource that serves a large market has a large marginal benefit because the effects are multiplied by the size of the market.
Edit: I spent the whole day thinking about it and at some point the thoughts started flowing, so I wrote up a post. Thanks again for referring me to The Superstar Effect!