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The Pricing of Sports Events: Do Teams Maximize Profit?

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  • Ferguson, D G, , et al

Abstract

A model of price setting behavior by National Hockey League teams, based on the assumption of profit maximization, is developed, estimated, and tested. The model implies parameter restrictions across equations of a two-equation simultaneous nonlinear econometric model, tested by a likelihood ratio test, and implies restrictions on the first and second derivatives of the revenue function, tested with Wald tests. The results, in large measure, support the hypothesis that hockey teams are profit maximizers, in contrast to some suggestions in the literature. The analysis provides an attractive example of the potential of sports data for testing behavioral hypotheses in economics. Coauthors are Kenneth G. Stewart, J. C. H. Jones, and Andre Le Dressay. Copyright 1991 by Blackwell Publishing Ltd.

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  • Ferguson, D G, , et al, 1991. "The Pricing of Sports Events: Do Teams Maximize Profit?," Journal of Industrial Economics, Wiley Blackwell, vol. 39(3), pages 297-310, March.
  • Handle: RePEc:bla:jindec:v:39:y:1991:i:3:p:297-310
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    Cited by:

    1. Richard J. Cebula, 2009. "Teaching How Private Enterprise Works Using Professional Sports: A Brief Note on the Case of Individual NHL Players' Salaries," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 24(Spring 20), pages 165-174.
    2. Cyrenne, Philippe, 2001. "A Quality-of-Play Model of a Professional Sports League," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 444-452, July.
    3. Jakee, Keith & Kenneally, Martin & Mitchell, Hamish, 2010. "Asymmetries in scheduling slots and game-day revenues: An example from the Australian Football League," Sport Management Review, Elsevier, vol. 13(1), pages 50-64, February.
    4. repec:eee:pubeco:v:153:y:2017:i:c:p:1-8 is not listed on IDEAS
    5. Lehmann, Erik & Weigand, Jürgen, 1997. "Fußball als ökonomisches Phänomen: Money Makes the Ball Go Round," Thuenen-Series of Applied Economic Theory 08, University of Rostock, Institute of Economics.

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