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A Quality-of-Play Model of a Professional Sports League

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  • Cyrenne, Philippe

Abstract

Assuming that consumers value both the absolute and relative quality of play, I compare the choice of ticket prices, team qualities, and number of games played in a noncooperative outcome versus that chosen by a social planner. I find that the nature of consumer preferences regarding the quality of play determines whether the demand for talented players are strategic complements or substitutes. A strong preference by fans for a superior team makes players strategic substitutes, and a concern for a high quality of play and competitive balance make players strategic complements. Moreover, when fans only value the relative quality of play, there is an overemployment of talented players in the noncooperative outcome versus the socially optimal outcome; when they only value the absolute quality of play then there is an underemployment of talented players in the noncooperative outcome. Copyright 2001 by Oxford University Press.

Suggested Citation

  • 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.
  • Handle: RePEc:oup:ecinqu:v:39:y:2001:i:3:p:444-52
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    References listed on IDEAS

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    1. 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.
    2. Spence, Michael, 1976. "Product Differentiation and Welfare," American Economic Review, American Economic Association, vol. 66(2), pages 407-414, May.
    3. 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.
    4. Avinash Dixit, 1979. "Quality and Quantity Competition," Review of Economic Studies, Oxford University Press, vol. 46(4), pages 587-599.
    5. Scully, Gerald W., 1995. "The Market Structure of Sports," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226743950, April.
    6. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
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    Citations

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    Cited by:

    1. Clemes, Michael D. & Brush, Gregory J. & Collins, Mark J., 2011. "Analysing the professional sport experience: A hierarchical approach," Sport Management Review, Elsevier, vol. 14(4), pages 370-388.
    2. Helmut M. Dietl & Markus Lang & Alexander Rathke, 2011. "The Combined Effect Of Salary Restrictions And Revenue Sharing In Sports Leagues," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 447-463, April.
    3. Philippe Cyrenne, 2009. "Modelling Professional Sports Leagues: An Industrial Organization Approach," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(3), pages 193-215, May.
    4. Helmut M. Dietl & Markus Lang, 2008. "The Effect Of Gate Revenue Sharing On Social Welfare," Contemporary Economic Policy, Western Economic Association International, vol. 26(3), pages 448-459, July.
    5. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
    6. repec:bla:coecpo:v:36:y:2018:i:1:p:200-214 is not listed on IDEAS
    7. Philippe Cyrenne, 2013. "Player Salaries, Player Mobility and the Invariance Principle: Evidence from the National Hockey League," Departmental Working Papers 2013-04, The University of Winnipeg, Department of Economics.
    8. Helmut Dietl & Egon FrancK & Markus Lang & Alexander Rathke, 2008. "Welfare Effects of Salary Caps in Sports Leagues with Win-Maximizing Clubs," Working Papers 0825, International Association of Sports Economists;North American Association of Sports Economists.
    9. Helmut Dietl & Markus Lang & Alexander Rathke, 2009. "The Combined Effect of Salary Restrictions and Revenue Sharing on Club Profits, Player Salaries, and Competitive Balance," Working Papers 0909, International Association of Sports Economists;North American Association of Sports Economists.

    More about this item

    JEL classification:

    • L0 - Industrial Organization - - General
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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