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Uncertainty by regulation: Rottenberg׳s invariance principle

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  • Fort, Rodney
  • Maxcy, Joel
  • Diehl, Mark

Abstract

What has come to be called Rottenberg׳s (1956) “Invariance Principle” states that the same talent allocation would result in a profit-maximizing league with or without interventions often claimed in the name of furthering competitive balance (e.g., a player draft or a reservation system that granted club owners complete control of the player׳s labor market). While the stuff of undergraduate classes on sports economics, the invariance principle goes virtually ignored in policy. We provide the basic modern theory of the invariance principle, review the empirical work on the topic, and apply meta-analysis thinking to derive future research ideas on this fundamental sports economics principle.

Suggested Citation

  • Fort, Rodney & Maxcy, Joel & Diehl, Mark, 2016. "Uncertainty by regulation: Rottenberg׳s invariance principle," Research in Economics, Elsevier, vol. 70(3), pages 454-467.
  • Handle: RePEc:eee:reecon:v:70:y:2016:i:3:p:454-467
    DOI: 10.1016/j.rie.2016.06.004
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    1. Hayley Jang & Young Hoon Lee & Rodney Fort, 2019. "Winning In Professional Team Sports: Historical Moments," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 103-120, January.
    2. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    3. Lee, Travis, 2020. "Competitive Balance in the National Hockey League after Unrestricted Free Agency and the Salary Cap," MPRA Paper 108400, University Library of Munich, Germany.

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