The Pricing of Sports Events: Do Teams Maximize Profit?
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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Volume (Year): 39 (1991)
Issue (Month): 3 (March)
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