Revenue Sharing, Competitive Balance and the Contest Success Function
AbstractThis paper investigates revenue sharing in an asymmetric two team contest model of a sports league with Nash behavior of team owners. The innovation of the analysis is that it focuses on the role of the contest success function (CSF). In case of an inelastic talent supply, revenue sharing turns out to worsen competitive balance regardless of the shape of the CSF. For the case of an elastic talent supply, in contrast, the effect of revenue sharing on competitive balance depends on the specification of the CSF. We fully characterize the class of CSFs for which revenue sharing leaves unaltered competitive balance and identify CSFs ensuring that revenue sharing renders the contest closer.
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Bibliographic InfoPaper provided by Otto-von-Guericke University Magdeburg, Faculty of Economics and Management in its series FEMM Working Papers with number 08012.
Length: 21 pages
Date of creation: Apr 2008
Date of revision:
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Revenue Sharing; Competitive Balance; Contest Success Function;
Other versions of this item:
- Marco Runkel, 2011. "Revenue Sharing, Competitive Balance and the Contest Success Function," German Economic Review, Verein für Socialpolitik, vol. 12(3), pages 256-273, 08.
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-04-21 (All new papers)
- NEP-IPR-2008-04-21 (Intellectual Property Rights)
- NEP-MIC-2008-04-21 (Microeconomics)
- NEP-SPO-2008-04-21 (Sports & Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michelle R. Garfinkel & Stergios Skaperdas, 2006.
"Economics of Conflict: An Overview,"
050623, University of California-Irvine, Department of Economics, revised Sep 2006.
- Marco Runkel, 2006. "Optimal contest design, closeness and the contest success function," Public Choice, Springer, vol. 129(1), pages 217-231, October.
- Yiquan Gu & Tobias Wenzel, 2007.
"A Note on the Excess Entry Theorem in Spatial Models with Elastic Demand,"
Ruhr Economic Papers
0033, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Gu, Yiquan & Wenzel, Tobias, 2009. "A note on the excess entry theorem in spatial models with elastic demand," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 567-571, September.
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