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The Sports Business as a Labor Market Laboratory

  • Lawrence M. Kahn

With superior data on compensation and productivity, as well as the occurrence of abrupt, dramatic market structure and player allocation rules changes, sports labor markets offer an excellent setting in which to test economic hypotheses. This paper reviews evidence from sports in four areas: employer monopsony, discrimination, the Coase Theorem, and incentive contracts, supervision and performance. There is considerable evidence of monopsony as well as for the existence of some forms of discrimination against minority athletes. Incentive contracts have strong effects on player performance and behavior, and there is mixed evidence on the predictions of the Coase Theorem.

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Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 14 (2000)
Issue (Month): 3 (Summer)
Pages: 75-94

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Handle: RePEc:aea:jecper:v:14:y:2000:i:3:p:75-94
Note: DOI: 10.1257/jep.14.3.75
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  1. Lawrence M. Kahn, 1992. "The Effects of Race on Professional Football Players' Compensation," ILR Review, Cornell University, ILR School, vol. 45(2), pages 295-310, January.
  2. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
  3. William D. Walsh, 1992. "The Entry Problem of Francophones in the National Hockey League: A Systemic Interpretation," Canadian Public Policy, University of Toronto Press, vol. 18(4), pages 443-460, December.
  4. Michael Krashinsky & Harry A. Krashinsky, 1997. "Do English Canadian Hockey Teams Discriminate Against French Canadian Players?," Canadian Public Policy, University of Toronto Press, vol. 23(2), pages 212-216, June.
  5. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64, pages 242.
  6. Ronald G. Ehrenberg & Michael L. Bognanno, 1990. "The incentive effects of tournaments revisited: Evidence from the European PGA tour," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(3), pages 74-88, February.
  7. Hausman, Jerry A & Leonard, Gregory K, 1997. "Superstars in the National Basketball Association: Economic Value and Policy," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 586-624, October.
  8. Neil Longley, 1995. "Salary Discrimination in the National Hockey League: The Effects of Team Location," Canadian Public Policy, University of Toronto Press, vol. 21(4), pages 413-422, December.
  9. Ehrenberg, Ronald G & Bognanno, Michael L, 1990. "Do Tournaments Have Incentive Effects?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1307-24, December.
  10. Marc Lavoie & Gilles Grenier & Serge Coulombe, 1992. "Performance Differentials in the National Hockey League: Discrimination Versus Style-of-Play Thesis," Canadian Public Policy, University of Toronto Press, vol. 18(4), pages 461-469, December.
  11. Lawrence M. Kahn, 1993. "Managerial Quality, Team Success, and Individual Player Performance in Major League Baseball," ILR Review, Cornell University, ILR School, vol. 46(3), pages 531-547, April.
  12. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-30, December.
  13. Kahn, Lawrence M, 1993. "Free Agency, Long-Term Contracts and Compensation in Major League Baseball: Estimates from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 157-64, February.
  14. Arthur S. Goldberger, 1984. "Reverse Regression and Salary Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 19(3), pages 293-318.
  15. Bodvarsson, Orn B & Brastow, Raymond T, 1998. "Do Employers Pay for Consistent Performance?: Evidence from the NBA," Economic Inquiry, Western Economic Association International, vol. 36(1), pages 145-60, January.
  16. Orszag, Jonathan M., 1994. "A new look at incentive effects and golf tournaments," Economics Letters, Elsevier, vol. 46(1), pages 77-88, September.
  17. Hoang, Ha & Rascher, Dan, 1999. "The NBA, Exit Discrimination, and Career Earnings," MPRA Paper 3542, University Library of Munich, Germany.
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