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Bidding Till Bankrupt: Destructive Competition in Professional Team Sports

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  • Whitney, James D

Abstract

The analysis and evidence here suggest that the market for star athletes in professional sports could be subject to "destructive competition"--a competitive process that drives some participants from a market even though it is inefficient for them to leave. When pursuing a league championship, the talent that turns an average team into a contender contributes disproportionately to the team's success. Teams that fail to earn enough on the last stars they sign to offset losses on their inframarginal talent will abandon a competitive market for star athletes. Other situations that involve input rivalry between producers might yield similar results. Copyright 1993 by Oxford University Press.

Suggested Citation

  • Whitney, James D, 1993. "Bidding Till Bankrupt: Destructive Competition in Professional Team Sports," Economic Inquiry, Western Economic Association International, vol. 31(1), pages 100-115, January.
  • Handle: RePEc:oup:ecinqu:v:31:y:1993:i:1:p:100-115
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    Citations

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    Cited by:

    1. Egon Franck, 2010. "Private Firm, Public Corporation or Member’s Association Governance Structures in European Football," International Journal of Sport Finance, Fitness Information Technology, vol. 5(2), pages 108-127, May.
    2. Sherstyuk, Katerina, 1998. "Efficiency in partnership structures," Journal of Economic Behavior & Organization, Elsevier, vol. 36(3), pages 331-346, August.
    3. Dietl Helmut M & Duschl Tobias & Lang Markus, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Business and Politics, De Gruyter, vol. 13(2), pages 1-32, August.
    4. Roberto Burguet & József Sákovics, 2016. "Bidding for Talent in Sport," Working Papers 902, Barcelona Graduate School of Economics.
    5. Palomino, Frederic & Sakovics, Jozsef, 2004. "Inter-league competition for talent vs. competitive balance," International Journal of Industrial Organization, Elsevier, vol. 22(6), pages 783-797, June.
    6. 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.
    7. Dietl Helmut M & Lang Markus & Rathke Alexander, 2009. "The Effect of Salary Caps in Professional Team Sports on Social Welfare," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-23, April.
    8. Uschi Backes-Gellner & Simone N. Tuor, 2010. "Avoiding Labor Shortages by Employer Signaling: On the Importance of Good Work Climate and Labor Relations," ILR Review, Cornell University, ILR School, vol. 63(2), pages 271-286, January.
    9. Young Lee & Rodney Fort, 2008. "Attendance and the Uncertainty-of-Outcome Hypothesis in Baseball," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 33(4), pages 281-295, December.
    10. Lehmann, Erik & Weigand, Jürgen, 1998. "Wieviel Phantasie braucht die Fußballaktie?," Thuenen-Series of Applied Economic Theory 16, University of Rostock, Institute of Economics.
    11. 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.

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