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Bidding for Talent in Sport

Author

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  • Roberto Burguet
  • József Sákovics

Abstract

We present a realistic and novel micro-structure for the market for athletes in league sports. In our trading mechanism the clubs bid for individual players, internalizing the effect that a player not hired might play for the competition. For inelastic talent supply, our (wage-minimizing) equilibrium supports the Coasian results of Rottenberg (1956) and Fort and Quirk (1995): talent allocation is independent of initial "ownership" and revenue sharing arrangements. When talent supply is elastic, revenue sharing decreases the aggregate amount of talent hired. This negative effect on the talent level may be efficiency enhancing when the competition for talent results in excess talent being hired. For the first time in the literature, we carry out our entire analysis using a newly formulated, unified club objective, incorporating both pecuniary and non-pecuniary benefits.

Suggested Citation

  • Roberto Burguet & József Sákovics, 2016. "Bidding for Talent in Sport," Working Papers 902, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:902
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    References listed on IDEAS

    as
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    Cited by:

    1. Paul Madden, 2018. "Collective Bargaining in a Basic North American Sports League Model," The School of Economics Discussion Paper Series 1812, Economics, The University of Manchester.

    More about this item

    Keywords

    sports leagues; club objectives; revenue sharing;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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