Back to Basics: A New Look at Gate-revenue Sharing and Competitive Balance
AbstractMost models with profit maximizing teams conclude that competitive balance is unchanged or reduced in response to gate sharing. We critique these models and then develop three alternatives: adding unshared post-season revenue; modelling the largest market team as a dominant firm with a rising marginal cost of talent; and a new general model that incorporates both a consumer demand for athletic talent and close competition. All three approaches can cause gate sharing to increase competitive balance.
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Bibliographic InfoPaper provided by International Association of Sports Economists & North American Association of Sports Economists in its series Working Papers with number 0607.
Length: 42 pages
Date of creation: Jun 2006
Date of revision:
Sport; Monopsony; Monopoly Power;
Find related papers by JEL classification:
- J0 - Labor and Demographic Economics - - General
- L0 - Industrial Organization - - General
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Recreation; Tourism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-09 (All new papers)
- NEP-COM-2006-07-09 (Industrial Competition)
- NEP-MIC-2006-07-09 (Microeconomics)
- NEP-SPO-2006-07-09 (Sports & Economics)
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- Michel Cavagnac, 2009. "Revenue Sharing and Competitive Balance When Teams are not Wage Takers," Review of Industrial Organization, Springer, vol. 35(3), pages 299-313, November.
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