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Promotion and Relegation in Sporting Contests

Author

Listed:
  • Stefan Szymanski

    () (Imperial College London)

  • Tommaso M. Valletti

    () (Imperial College London
    CEPR, London)

Abstract

The conventional model of a team sports league is based on the North American major leagues which have a fixed number of members, entry is rare and only granted by permission of the incumbents (the closed system). European soccer leagues operate a system of promotion and relegation, effectively permitting entry on merit to all-comers (the open system). This paper examines the impact of openness on the incentive of teams to invest (expend effort) and share resources (redistribution) in the context of a Tullock contest. The main conclusion of the paper is that openness tends to enhance effort incentives, but diminishes the incentive to share income.

Suggested Citation

  • Stefan Szymanski & Tommaso M. Valletti, 2005. "Promotion and Relegation in Sporting Contests," Rivista di Politica Economica, SIPI Spa, vol. 95(3), pages 3-39, May-June.
  • Handle: RePEc:rpo:ripoec:v:95:y:2005:i:3:p:3-39
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    References listed on IDEAS

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    1. Nti, Kofi O, 1997. "Comparative Statics of Contests and Rent-Seeking Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 43-59, February.
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    4. Szymanski, Stefan & Valletti, Tommaso M., 2005. "Incentive effects of second prizes," European Journal of Political Economy, Elsevier, vol. 21(2), pages 467-481, June.
    5. Beck A. Taylor & Justin G. Trogdon, 2002. "Losing to Win: Tournament Incentives in the National Basketball Association," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 23-41, January.
    6. Richard L. Fullerton & R. Preston McAfee, 1999. "Auctioning Entry into Tournaments," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 573-605, June.
    7. John J. Siegfried & Andrew Zimbalist, 2000. "The Economics of Sports Facilities and Their Communities," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 95-114, Summer.
    8. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
    9. Baye, M.R. & Kovenock, D., 1993. "The Solution to the Tullock Rent-Seeking Game When R > 2: Mixed Strategy Equilibria and Mean Dissipation Rates," Papers 9368, Tilburg - Center for Economic Research.
    10. Vrooman, John, 2000. "The Economics of American Sports Leagues," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(4), pages 364-398, September.
    11. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1993. "The Solution to the Tullock Rent-Seeking Game when R > 2: Mixed Strategy Equilibria and Mean Dissipation Rates," Papers 10-93-9, Pennsylvania State - Department of Economics.
    12. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
    13. Luigi Buzzacchi & Stefan Szymanski & Tommaso Valletti, 2003. "Equality of Opportunity and Equality of Outcome: Open Leagues, Closed Leagues and Competitive Balance *#We thank the Editor and an anonymous referee for helpful comments," Journal of Industry, Competition and Trade, Springer, vol. 3(3), pages 167-186, September.
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    Citations

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    Cited by:

    1. Jean-Baptiste Dherbecourt & Bastien Drut, 2009. "Who will go down this year ? The Determinants of Promotion and Relegation in European Soccer Leagues," EconomiX Working Papers 2009-40, University of Paris Nanterre, EconomiX.
    2. John Jasina & Kurt Rotthoff, 2012. "A model of promotion and relegation in league sports," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 36(2), pages 303-318, April.
    3. Puterman Martin L & Wang Qingchen, 2011. "Optimal Dynamic Clustering Through Relegation and Promotion: How to Design a Competitive Sports League," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 7(2), pages 1-34, May.
    4. Dietl, Helmut & Duschl, Tobias, 2012. "The organization of professional sports leagues: A comparison of European and North-American leagues from the perspective of platform organization," Edition HWWI: Chapters,in: Sport und Sportgroßveranstaltungen in Europa - zwischen Zentralstaat und Regionen, pages 111-126 Hamburg Institute of International Economics (HWWI).
    5. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    6. Giorgo Sertsios, 2007. "¿Puede el Diseño de un Torneo Deportivo Afectar su Asistencia?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 44(129), pages 59-89.
    7. Luigi Buzzacchi & Stefan Szymanski & Tommaso Valletti, 2003. "Equality of Opportunity and Equality of Outcome: Open Leagues, Closed Leagues and Competitive Balance *#We thank the Editor and an anonymous referee for helpful comments," Journal of Industry, Competition and Trade, Springer, vol. 3(3), pages 167-186, September.
    8. Stefan Szymanski, 2007. "The Champions League And The Coase Theorem," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(3), pages 355-373, July.
    9. Nicola Giocoli, 2007. "Competitive balance in football leagues when teams have different goals," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 54(3), pages 345-370, September.
    10. Pedro Garcia-del-Barrio & Stefan Szymanski, 2009. "Goal! Profit Maximization Versus Win Maximization in Soccer," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(1), pages 45-68, February.
    11. Brachert, Matthias, 2018. "The regional effects of professional sports franchises: Causal evidence from four European football leagues," IWH Discussion Papers 10/2018, Halle Institute for Economic Research (IWH).

    More about this item

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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