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Competitive balance in sports leagues and the paradox of power

Listed author(s):
  • Stefan Szymanski


    (Tanaka Business School, Imperial College)

It is generally thought that competitive equilibrium in sports leagues involves too little competitive balance (the strong dominate the weak too much- a more even contest would be more attractive). However, it is possible to sow in a standard logit contest model that the reverse is true – the strong do not win “enough”- i.e. more wins by the strong team would increase attendance or revenues. This is consistent with Hirshleifer’s paradox of power. However, this is only true so long as the strong do not become too dominant- otherwise the regime switches to one of pre-emption: the strong never lose. This paper identifies the conditions under which the paradox of power and pre-emption will manifest themselves.

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File Function: Original version completed April 2006
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Paper provided by International Association of Sports Economists & North American Association of Sports Economists in its series Working Papers with number 0618.

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Length: 12 pages
Date of creation: Oct 2006
Handle: RePEc:spe:wpaper:0618
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