IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_1101.html
   My bibliography  Save this paper

Sports League Expansion and Economic Efficiency: Monopoly Can Enhance Consumer Welfare

Author

Listed:
  • Lawrence Kahn

Abstract

This paper studies optimal sport league size. League expansion lowers average player quality, reducing fans’ utility in inframarginal locations, while fan utility in new locations rises. Welfare analyses of such expansions must compare these two effects. Using a model where fan demand depends on average player quality and locality-specific factors, I find that under various pricing schemes, optimal league size is smaller than under free entry: the marginal team ignores its effects on inframarginal fans’ utility. In some cases, the monopoly outcome is optimal, while in others the optimum league size is between the competitive and monopoly solutions.

Suggested Citation

  • Lawrence Kahn, 2003. "Sports League Expansion and Economic Efficiency: Monopoly Can Enhance Consumer Welfare," CESifo Working Paper Series 1101, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1101
    as

    Download full text from publisher

    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp1101.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Roger G. Noll, 2003. "The Economics of Baseball Contraction," Journal of Sports Economics, , vol. 4(4), pages 367-388, November.
    2. 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.
    3. Hausman, Jerry A & Leonard, Gregory K, 1997. "Superstars in the National Basketball Association: Economic Value and Policy," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 586-624, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daniel, Rascher, 2008. "Franchise Relocations, Expansions, and Mergers in Professional Sports Leagues," MPRA Paper 25809, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_1101. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Klaus Wohlrabe). General contact details of provider: http://edirc.repec.org/data/cesifde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.