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The Invariance Proposition in Baseball: New Evidence

  • Rockerbie, Duane

This paper considers the changes in revenue sharing that occurred prior to the 2007 season and its effects on parity via its effects on marginal revenues. Based on the results from an empirical specification for team revenue, we find evidence that the reduction in revenue sharing increased marginal revenue by approximately the same amount for both small and large market clubs despite other differences in how small and large market club revenues are determined. The upshot of this result is that the modest change in revenue sharing had little to no effect on league parity in the three seasons following its implementation. The well-known invariance proposition in the economics of sport literature that predicts this result appears to hold.

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File URL: http://mpra.ub.uni-muenchen.de/55020/1/MPRA_paper_55020.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 55020.

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Date of creation: Sep 2011
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Handle: RePEc:pra:mprapa:55020
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  1. SZYMANSKI, Stefan & KÉSENNE, Stefan, 2003. "Competitive balance and gate revenue sharing in team sports," Working Papers 2003003, University of Antwerp, Faculty of Applied Economics.
  2. KÉSENNE, Stefan, . "Revenue sharing and competitive balance. Does it invariance proposition hold?," Working Papers 2003021, University of Antwerp, Faculty of Applied Economics.
  3. E. Woodrow Eckard, 2001. "Baseball’s Blue Ribbon Economic Report," Journal of Sports Economics, , vol. 2(3), pages 213-227, August.
  4. Frederick Wiseman & Sangit Chatterjee, 2003. "Team payroll and team performance in major league baseball: 1985-2002," Economics Bulletin, AccessEcon, vol. 1(2), pages 1-10.
  5. Krautmann, Anthony C, 1999. "What's Wrong with Scully-Estimates of a Player's Marginal Revenue Product," Economic Inquiry, Western Economic Association International, vol. 37(2), pages 369-81, April.
  6. Jason Winfree & Jill McCluskey & Ron Mittelhammer & Rodney Fort, 2004. "Location and attendance in major league baseball," Applied Economics, Taylor & Francis Journals, vol. 36(19), pages 2117-2124.
  7. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-30, December.
  8. Rodney Fort, 2010. "Observation, Replication, and Measurement in Sports Economics," Journal of Sports Economics, , vol. 11(1), pages 3-16, February.
  9. Jason Winfree & Rodney Fort, 2012. "Nash Conjectures and Talent Supply in Sports League Modeling," Journal of Sports Economics, , vol. 13(3), pages 306-313, June.
  10. Joel Maxcy, 2009. "Progressive Revenue Sharing in Major League Baseball: The Effect on Player Transfers and Talent Distribution," Review of Industrial Organization, Springer, vol. 35(3), pages 275-297, November.
  11. Rockerbie, Duane, 2007. "Free Agent Auctions and Revenue Sharing: A Simple Approach," MPRA Paper 2218, University Library of Munich, Germany.
  12. Bresnahan, Timothy F, 1981. "Duopoly Models with Consistent Conjectures," American Economic Review, American Economic Association, vol. 71(5), pages 934-45, December.
  13. repec:ebl:ecbull:v:1:y:2003:i:2:p:1-10 is not listed on IDEAS
  14. Michael A. Leeds & Sandra Kowalewski, 2001. "Winner Take All in the NFL," Journal of Sports Economics, , vol. 2(3), pages 244-256, August.
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