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Revenue Sharing, Competitive Balance and the Contest Success Function

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Author Info
Marco Runkel () (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

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Abstract

This 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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File URL: http://www.ww.uni-magdeburg.de/fwwdeka/femm/a2008_Dateien/2008_12.pdf
File Format: application/pdf
File Function: First version, 2008
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Publisher Info
Paper provided by Otto-von-Guericke University Magdeburg, Faculty of Economics and Management in its series FEMM Working Papers with number 08012.

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Length: 21 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:mag:wpaper:08012

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Related research
Keywords: Revenue Sharing; Competitive Balance; Contest Success Function;

Find related papers by JEL classification:
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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