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Rule Changes and Competitive Balance in Formula One Motor Racing

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  • Mastromarco, Camilla
  • Runkel, Marco

Abstract

This paper provides an economic explanation of the frequent rule changes in the Formula One (F1) motor racing series. In a two-stage model, the FIA (as the organizer of the F1) first decides whether to change the rules or not, and then the racing teams compete in a contest. It turns out that a rule change reduces the teams' performances, but also improves competitive balance between the teams. The rule change is implemented, if the FIA's revenue gain from the latter effect overcompensates the FIA's revenue loss from the former effect. We provide empirical evidence from F1 seasons in the period 1950-2003 which supports the main implications of the model.

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File URL: http://epub.ub.uni-muenchen.de/386/1/MastromarcoRunkel.pdf
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Bibliographic Info

Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 386.

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Date of creation: Jun 2004
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Handle: RePEc:lmu:muenec:386

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Keywords: Formula One ; Competitive Balance ; Contest;

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References

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  1. Brad R. Humphreys, 2002. "Alternative Measures of Competitive Balance in Sports Leagues," Journal of Sports Economics, , vol. 3(2), pages 133-148, May.
  2. Marco Runkel, 2004. "Optimal Contest Design When The Designer's Payoff Depends On Competitive Balance," Royal Economic Society Annual Conference 2004 156, Royal Economic Society.
  3. Dasgupta, Ani & Nti, Kofi O., 1998. "Designing an optimal contest," European Journal of Political Economy, Elsevier, vol. 14(4), pages 587-603, November.
  4. Craig A. Depken, II, 2002. "Free Agency and the Concentration of Player Talent in Major League Baseball," Journal of Sports Economics, , vol. 3(4), pages 335-353, November.
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Cited by:
  1. Kenneth Linna & Evan Moore & Rodney Paul & Andrew Weinbach, 2014. "The Effects of the Clock and Kickoff Rule Changes on Actual and Market-Based Expected Scoring in NCAA Football," International Journal of Financial Studies, MDPI, Open Access Journal, vol. 2(2), pages 179-192, April.
  2. Krauskopf, Thomas & Langen, Martin & Bünger, Björn, 2010. "The search for optimal competitive balance in formula one," CAWM Discussion Papers 38, Center of Applied Economic Research Münster (CAWM), University of Münster.
  3. Langen, Martin & Krauskopf, Thomas, 2010. "The election of a world champion," CAWM Discussion Papers 39, Center of Applied Economic Research Münster (CAWM), University of Münster.
  4. Marco Di Domizio & Mattia Palombini, 2011. "Competitività orizzontale e verticale nel ciclismo professionistico: alcune riflessioni sul circuito pro tour," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 6(3), pages 35-54, Febbraio.

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