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A Test of the Optimal Positive Production Network Externality in Major League Baseball

  • Daniel, Rascher

Unlike most businesses, firms in a sports league need viable competitors. While a certain amount of domination is optimal, from an individual owners perspective, too much will result in league dissolution, and thus a lower utility for every owner. Hence, there is a limited positive production network externality. This paper examines the optimal level of the externality in professional baseball using data from each game of the 1996 MLB season. Both absolute and relative quality are important determinants of the demand for sports contests. In fact, fans prefer a game in which two high quality teams are competing, but the home team has approximately twice as good of a chance as the visiting team of winning.

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File URL: http://mpra.ub.uni-muenchen.de/25832/1/MPRA_paper_25832.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 25832.

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Date of creation: 1999
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Handle: RePEc:pra:mprapa:25832
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  1. Peel, David A & Thomas, Dennis A, 1988. "Outcome Uncertainty and the Demand for Football: An Analysis of Match Attendances in the English Football League," Scottish Journal of Political Economy, Scottish Economic Society, vol. 35(3), pages 242-49, August.
  2. Peter J. Sloane, 2000. "The Regulation of Professional Team Sports," IASE Conference Papers 0003, International Association of Sports Economists.
  3. Jennett, Nicholas I, 1984. "Attendances, Uncertainty of Outcome and Policy in Scottish League Football," Scottish Journal of Political Economy, Scottish Economic Society, vol. 31(2), pages 176-98, June.
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