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Subsidies as incentive mechanisms in sports

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  • Rodney Fort

    (Department of Economics, Washington State University, Pullman, WA 99164-4741, USA)

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    Abstract

    Applying even the most fundamental public choice principles suggests that subsidies to sports team owners will be inversely related to ticket prices. The primary aim of this paper is to demonstrate the impact of such an inverse relationship on the pricing behavior of owners. Theory shows that if either the rent or concessions|parking response by policy makers is elastic (percentage change in subsidy is greater than the percentage change in prices by teams), then the other one cannot be. A (very) cursory look at readily available NFL data lends support to the theory, at least for single-use stadiums. The outcomes here may inform any future analysis that extends the idea into the full-blown analysis of the politics of subsidies and for those interested in the rationing by waiting that often occurs at sports events. Copyright © 2004 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/mde.1109
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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

    Volume (Year): 25 (2004)
    Issue (Month): 2 ()
    Pages: 95-102

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    Handle: RePEc:wly:mgtdec:v:25:y:2004:i:2:p:95-102

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    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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    1. Quigley, John M. & Smolensky, Eugene, 1997. "Stickball in San Francisco," Berkeley Program on Housing and Urban Policy, Working Paper Series qt3rw313m3, Berkeley Program on Housing and Urban Policy.
    2. Rodney Fort, 2004. "Inelastic sports pricing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(2), pages 87-94.
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    Cited by:
    1. Atashbar, Tohid, 2012. "Illusion therapy: How to impose an economic shock without social pain," Journal of Policy Modeling, Elsevier, vol. 34(1), pages 99-111.
    2. Pelnar, Gregory, 2009. "Competition and Cooperation between Professional Sports Franchises: The Impact on Ticket Prices," MPRA Paper 17787, University Library of Munich, Germany.
    3. Matthew T. Brown & Daniel A. Rascher & Wesley M. Ward, 2006. "The Use of Public Funds for Private Benefit: An Examination of the Relationship Between Public Stadium Funding and Ticket Prices in the National Football League," International Journal of Sport Finance, Fitness Information Technology, vol. 1(2), pages 109-118, May.

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