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On the Evolution of Competitive Balance: The Impact of an Increasing Global Search


  • Martin B. Schmidt
  • David J. Berri


The Coase theorem maintains that where free-market precepts exist, the allocation of property rights does not impact the distribution of resources. An application to Major League Baseball suggests that institutions such as free agency and the reverse-order amateur draft would not impact player distributions and therefore would not impact competitive balance. The present study finds that the distribution of wins is generally consistent with the precepts of the Coase theorem and therefore suggests a course for those who wish to alter the level of competitive balance: Major League Baseball should increase its focus on expanding the size of its labor pool. (JEL O15, L83, C22) Copyright 2003, Oxford University Press.

Suggested Citation

  • Martin B. Schmidt & David J. Berri, 2003. "On the Evolution of Competitive Balance: The Impact of an Increasing Global Search," Economic Inquiry, Western Economic Association International, vol. 41(4), pages 692-704, October.
  • Handle: RePEc:oup:ecinqu:v:41:y:2003:i:4:p:692-704

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    References listed on IDEAS

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    Cited by:

    1. Daniel Mizak & Anthony Stair & John Neral, 2007. "The adjusted churn: an index of competitive balance for sports leagues based on changes in team standings over time," Economics Bulletin, AccessEcon, vol. 26(3), pages 1-7.
    2. repec:ebl:ecbull:v:26:y:2007:i:3:p:1-7 is not listed on IDEAS
    3. Martin Schmidt, 2011. "Institutional Change and Factor Movement in Major League Baseball: An Examination of the Coase Theorem’s Invariance Principle," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 39(3), pages 187-205, November.
    4. Papps, Kerry L. & Bryson, Alex & Gomez, Rafael, 2011. "Heterogeneous worker ability and team-based production: Evidence from major league baseball, 1920-2009," Labour Economics, Elsevier, vol. 18(3), pages 310-319, June.
    5. Nieswiadomy Michael L. & Strazicich Mark C. & Clayton Stephen, 2012. "Was There a Structural Break in Barry Bonds's Bat?," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 8(3), pages 1-19, October.
    6. 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.
    7. repec:ebl:ecbull:v:12:y:2005:i:5:p:1-11 is not listed on IDEAS
    8. Fort, Rodney & Maxcy, Joel & Diehl, Mark, 2016. "Uncertainty by regulation: Rottenberg׳s invariance principle," Research in Economics, Elsevier, vol. 70(3), pages 454-467.
    9. P. Dorian Owen & Nicholas King, 2015. "Competitive Balance Measures In Sports Leagues: The Effects Of Variation In Season Length," Economic Inquiry, Western Economic Association International, vol. 53(1), pages 731-744, January.
    10. repec:ebl:ecbull:v:12:y:2004:i:9:p:1-14 is not listed on IDEAS
    11. repec:qut:auncer:2013_04 is not listed on IDEAS
    12. Daniel Mizak & Armond Rossi & Anthony Stair, 2005. "Assessing alternative competitive balance measures for sports leagues: a theoretical examination of standard deviations, gini coefficients, & the index of dissimilarity," Economics Bulletin, AccessEcon, vol. 12(5), pages 1-11.
    13. David Berri & Stacey Brook & Aju Fenn, 2011. "From college to the pros: predicting the NBA amateur player draft," Journal of Productivity Analysis, Springer, vol. 35(1), pages 25-35, February.
    14. Daniel Mizak & Anthony Stair, 2004. "The relationship between payroll and performance disparity in major league baseball: an alternative measure," Economics Bulletin, AccessEcon, vol. 12(9), pages 1-14.
    15. Rodney Fort & Young Hoon Lee, 2007. "Structural Change, Competitive Balance, And The Rest Of The Major Leagues," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 519-532, July.
    16. Tony Caporale & Trevor Collier, 2015. "Are We Getting Better or Are They Getting Worse? Draft Position, Strength of Schedule, and Competitive Balance in the National Football League," Journal of Labor Research, Springer, vol. 36(3), pages 291-300, September.
    17. Martin Schmidt, 2006. "On the evolution of competition: an application of nonlinear tests," Applied Economics, Taylor & Francis Journals, vol. 38(1), pages 1-12.
    18. Meletakos, Panagiotis & Chatzicharistos, Dimitrios & Apostolidis, Nikolaos & Manasis, Vasilios & Bayios, Ioannis, 2016. "Foreign players and competitive balance in Greek basketball and handball championships," Sport Management Review, Elsevier, vol. 19(4), pages 391-401.
    19. Craig A. Depken II & Peter A. Groothuis & Mark C. Strazicich, 2016. "The Rise and Fall of the Enforcer in the National Hockey League," Working Papers 16-12, Department of Economics, Appalachian State University.

    More about this item

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes


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