A Contest Model of a Professional Sports League with Two-Sided Markets

Helmut Dietl, Tobias Duschl (), Egon Franck and Markus Lang
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Tobias Duschl: Institute for Strategy and Business Economics, University of Zurich

No 114, Working Papers from University of Zurich, Institute for Strategy and Business Economics (ISU)

Abstract: This paper develops a model of a professional sports league with network externalities by integrating the theory of two-sided markets into a contest model. In professional team sports, the competition of the clubs functions as a platform that enables sponsors to interact with fans. In these club-mediated interactions, positive network effects operate from the fan market to the sponsor market, while positive or negative network effects operate from the sponsor market to the fan market. Clubs react to these network effects by charging higher (lower) prices to sponsors (fans). The size of these network effects also determines the level of competitive balance within the league. We further show that clubs benefit from stronger combined network effects through higher profits and that network externalities can mitigate the negative effect of revenue sharing on competitive balance. Finally, we derive implications for improving competitive balance by taking advantage of network externalities.

Keywords: Competitive balance; contest; multisided market; network externalities; team sports league (search for similar items in EconPapers)
JEL-codes: L11 L13 L83 M21 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2009-11, Revised 2010-11
New Economics Papers: this item is included in nep-com, nep-ind, nep-net and nep-spo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/114_ISU_full.pdf (application/pdf)

Related works:
Journal Article: A Contest Model of a Professional Sports League with Two-Sided Markets (2012)
Working Paper: A Contest Model of a Professional Sports League with Two-Sided Markets (2010)
Working Paper: A Contest Model of a Professional Sports League with Two-Sided Markets (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:iso:wpaper:0114

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