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The late Sherwin Rosen elaborated on this insight, developing the contribution of “imperfect substitution” and scale to superstar economics. Imperfect substitution means that you "would rather listen to one song by your favorite singer than a song and a half by someone else. Or, in another context, it means that if you need to have heart surgery, you would rather have the best surgeon in Cleveland perform it rather than the second and third best together.” In the corporate context, a board of directors would sooner pay $100 million for the best possible CEO than $10 million for the second best, on the presumption that the additional $90 million is a pittance relative to the additional value the best CEO can create for a multinational company.
last-modified: 2021-02-27 01:52:30