Where talent is imperfectly substitutable and reproduction is cheap, small differences in ability produce enormous differences in reward.
Rosen's 1981 argument: nobody wants two mediocre performances instead of one excellent one, and technology lets the best serve everyone at once. The result is a market where the hundredth-best earns a small fraction of the best, though the difference in ability is slight. It explains sport, music and increasingly any winner-take-most market.
In practice
- A player marginally better than the next is paid several times more, and the club is being rational.
- A field where recordings replaced live performance concentrated income within one generation.