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The impact of the luxury tax on competitive balance in Major League Baseball

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Author Info

  • Olugbenga Ajilore

    ()
    (University of Toledo)

  • Joshua Hendrickson

    ()
    (Wayne State University of Toledo)

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    Abstract

    There has been much discussion recently in the world of professional sports about competitive balance. As more is focused on the growing disparity between large market and small market teams, one must ask whether the luxury tax, as implemented by Major League Baseball, has had its intended effect. This paper adds to the literature on competitive balance by developing measures to quantify competitiveness at the individual team-level. We estimate a model analyzing the impact of the luxury tax on competitive balance. The results show that the luxury tax is beginning to have the intended impact on competitive balance.

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    File URL: http://college.holycross.edu/RePEc/spe/AjiloreHendrickson_LuxuryTax.pdf
    File Function: Paper presented at the 7th Annual IASE Conference in Ottawa, Ontario, June 2005
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    Bibliographic Info

    Paper provided by International Association of Sports Economists & North American Association of Sports Economists in its series Working Papers with number 0727.

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    Length: 13 pages
    Date of creation: Oct 2007
    Date of revision:
    Handle: RePEc:spe:wpaper:0727

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    Web page: http://www.kennesaw.edu/naase
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    Related research

    Keywords: sports economics; Major League Baseball; Luxury Tax;

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