THE EFFECT OF GATE REVENUE SHARING ON SOCIAL WELFARE

Helmut Dietl and Markus Lang

Contemporary Economic Policy, 2008, vol. 26, issue 3, 448-459

Abstract: 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 counterintuitive 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 noncooperative league equilibrium yields a higher level of social welfare and club profits. Combining both results, it concludes that gate revenue sharing increases social welfare and club profits in our model. (JEL L83)

Date: 2008
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https://doi.org/10.1111/j.1465-7287.2007.00090.x

Related works:
Working Paper: The Effect of Gate Revenue-Sharing on Social Welfare (2007)
Working Paper: The Effect of Gate Revenue-Sharing on Social Welfare (2007)
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