In Winner-Takes-All Markets, "winners" are able to capture a very large share of the rewards, and the remaining competitors are left with very little.
Winner-takes-all markets occur as technology lessens the barriers to competition. Examples of winner-takes-all market growth abound, e.g.:
Entertainment. Consider the local opera house: At the turn of the century, Iowa alone had more than 1,500 of them. Thousands of sopranos earned adequate, if modest, livings from their live performances. But now, thanks to modem recordings, the world's best soprano can be literally everywhere at once. And since it costs no more to stamp out compact discs of Kathleen Battle's Mozart arias than her understudy's, most opera fans Esten to Battle. Thus Battle earns several million dollars a year while most other sopranos, many of whom are almost as talented, struggle to get by. .
Retail. In the past, a wide variety of local stores existed within different geographic regions. Today, however, better transportation, telecommunications and information technology systems have lifted the constraints to competition. Large firms like Wal-Mart are able to effectively manage vast resources in order to gain an advantage over local competitors and capture a large share in almost every market they enter .
Professional. The world's most respected neurosurgeons, for example, can now assist in the diagnosis and treatment of patients accross the globe--cutting into the business of other doctors and earning enormous sums of money themselves. Sophisticated clients increasingly turn to the single source they percieve as the best on a subject across professions and fields, wherever in the world they happen to be.
- 1] Robert H. Frank and Philip J. Cook, The Winner Take-All Society: How More and More Americans Compete for Fewer and Bigger Prizes, Encouraging Economic Waste, Income Inequality, and an Impoverished Cultural Life (1995, The Free Press). For a summary, see author's article, "It's a winner-take-all market - top money goes to top performing people or products". Washington Monthly, Dec, 1995. http://findarticles.com/p/articles/mi_m1316/is_n12_v27/ai_17828362/
- 2] http://www.investopedia.com/terms/w/winner-takes-all-market.asp#ixzz1Wc0S45PD