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The Peculiar Externalities of Professional Team Sports

Author

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  • James D. Whitney

Abstract

The economics literature has long been divided regarding whether competing sports teams can achieve the same, efficient allocation of playing skills that a revenue-maximizing league monopolist would choose despite the external effects the teams impose on each other in their pursuit of athletic talent. In this article an explicit consideration of the arbitrage incentives that underlie the marketing and pricing of playing skills indicates that decentralized franchises generally fail to allocate talent efficiently. For fans concerned about the championship prospects of their preferred team, the popular complaint has merit: "Big-city teams win too much."(JEL L83) Copyright 2005, Oxford University Press.

Suggested Citation

  • James D. Whitney, 2005. "The Peculiar Externalities of Professional Team Sports," Economic Inquiry, Western Economic Association International, vol. 43(2), pages 330-343, April.
    • Handle: RePEc:oup:ecinqu:v:43:y:2005:i:2:p:330-343
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    File URL: http://hdl.handle.net/10.1093/ei/cbi022
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    Cited by:

    1. Roberto Burguet & József Sákovics, 2019. "Bidding For Talent In Sport," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 85-102, January.
    2. Sami Dakhlia & Paul Pecorino, 2006. "Rent-seeking with scarce talent: A model of preemptive hiring," Public Choice, Springer, vol. 129(3), pages 475-486, December.
    3. 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.
    4. 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.

    More about this item

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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