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A Test of the Optimal Positive Production Network Externality in Major League Baseball

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  • Daniel, Rascher

Abstract

Unlike most businesses, firms in a sports league need viable competitors. While a certain amount of domination is optimal, from an individual owners perspective, too much will result in league dissolution, and thus a lower utility for every owner. Hence, there is a limited positive production network externality. This paper examines the optimal level of the externality in professional baseball using data from each game of the 1996 MLB season. Both absolute and relative quality are important determinants of the demand for sports contests. In fact, fans prefer a game in which two high quality teams are competing, but the home team has approximately twice as good of a chance as the visiting team of winning.

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File URL: http://mpra.ub.uni-muenchen.de/25832/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25832.

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Date of creation: 1999
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Handle: RePEc:pra:mprapa:25832

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Related research

Keywords: uncertainty of outcome; censored regression; cluster correlation; demand; baseball; network externality;

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References

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  1. Peter J. Sloane, 2000. "The Regulation of Professional Team Sports," IASE Conference Papers 0003, International Association of Sports Economists.
  2. Peel, David A & Thomas, Dennis A, 1988. "Outcome Uncertainty and the Demand for Football: An Analysis of Match Attendances in the English Football League," Scottish Journal of Political Economy, Scottish Economic Society, vol. 35(3), pages 242-49, August.
  3. Jennett, Nicholas I, 1984. "Attendances, Uncertainty of Outcome and Policy in Scottish League Football," Scottish Journal of Political Economy, Scottish Economic Society, vol. 31(2), pages 176-98, June.
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Citations

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Cited by:
  1. Martin Schmidt & David Berri, 2004. "Another look at competition: a regime-switching aproach," Applied Economics, Taylor & Francis Journals, vol. 36(21), pages 2453-2460.
  2. John C. Leadley & Zenon X. Zygmont, 2006. "When Is the Honeymoon Over? National Hockey League Attendance, 1970­2003," Canadian Public Policy, University of Toronto Press, vol. 32(2), pages 213-232, June.
  3. Men-Andri Benz & Leif Brandes & Egon Franck, 2006. "Do Soccer Associations Really Spend on a Good Thing? Empirical Evidence on Heterogeneity in the Consumer Response to Match Uncertainty of Outcome," Working Papers 0048, University of Zurich, Institute for Strategy and Business Economics (ISU), revised 2008.
  4. Coates, Dennis & Humphreys, Brad & Zhou, Li, 2012. "Outcome Uncertainty, Reference-Dependent Preferences and Live Game Attendance," Working Papers 2012-7, University of Alberta, Department of Economics.
  5. Donald I. Price & Kabir C. Sen, 2003. "The demand for game day attendance in college football: an analysis of the 1997 Division 1-A season," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(1), pages 35-46.
  6. Zulal Denaux & David Denaux & Yeliz Yalcin, 2011. "Factors Affecting Attendance of Major League Baseball: Revisited," Atlantic Economic Journal, International Atlantic Economic Society, vol. 39(2), pages 117-127, June.
  7. David Forrest & Robert Simmons & Babatunde Buraimo, 2005. "Outcome Uncertainty And The Couch Potato Audience," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(4), pages 641-661, 09.
  8. Rascher, Daniel & Rascher, Heather, 2004. "NBA Expansion and Relocation: A Viability Study of Various Cities," MPRA Paper 25740, University Library of Munich, Germany.
  9. Rodney J. Paul & Kristin K. Paul & Michael Toma & Andrew Brennan, 2007. "Attendance in the NY-Penn Baseball League: Effects of Performance, Demographics, and Promotions," New York Economic Review, New York State Economics Association (NYSEA), vol. 38(1), pages 72-81.
  10. Drayer, Joris & Rascher, Daniel A. & McEvoy, Chad D., 2012. "An examination of underlying consumer demand and sport pricing using secondary market data," Sport Management Review, Elsevier, vol. 15(4), pages 448-460.
  11. Stefan Szymanski, 2006. "Tilting the Playing Field: Why a sports league planner would choose less, not more, competitive balance," Working Papers 0620, International Association of Sports Economists & North American Association of Sports Economists.

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