The Effect of Gate Revenue-Sharing on Social Welfare
This paper provides a theoretical model of a team sports league based on contest theory and studies the welfare effect of gate revenue-sharing. It derives two counter-intuitive results. First, it challenges the "invariance proposition" by showing that revenue-sharing reduces competitive balance and thus produces a more unbalanced league. Second, the paper concludes that a lower degree of competitive balance compared with the non-cooperative league equilibrium yields a higher level of social welfare and club profits. Combining both results, we conclude that gate revenue-sharing increases social welfare and club profits in our model.
|Date of creation:||2006|
|Date of revision:||2007|
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