Winning Losers in the Italian Football League “Auction” for Co-Ownership Resolution

Nicola Dimitri
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Nicola Dimitri: Department of Economics and Statistics, University of Sienna, and Research Fellow, Maastricht School of Management

No 2012/08, Working Papers from Maastricht School of Management

Abstract: In the Italian Football League rights to a player’s performance could be co-owned by two clubs for one year. Co-ownership must then be resolved and if the clubs fail finding an agreement they are asked by the League to participate to an auction, where each of them submits a price offer for the missing half of the rights. The player offering the highest price obtains the missing half of the rights paying that price to the opponent. In the paper we characterize the auction equilibrium structure with both complete and incomplete information. Due to its features, a main finding in such auction is that “losers” can obtain a higher payoff than “winners”, and in this sense be the real winners. Then, by considering the auction as a more general mechanism for co-ownership resolution, we extend the model to any finite number of players and argue how some of the results with two players do not necessarily generalize. In particular, while with two players the equilibrium expected payoffs can never be negative this may not be so with a higher number of players. Finally, also with incomplete information the symmetric bidding equilibrium function with any finite number of players is in the “winning losers” spirit. Indeed, bids range between one’s value and twice of it, and increase with the number of players since it becomes more likely that some opponent will have a higher value.

Pages: 12 pages
Date: 2012-07
New Economics Papers: this item is included in nep-cta, nep-gth, nep-mic and nep-spo
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http://web2.msm.nl/RePEc/msm/wpaper/MSM-WP2012-08.pdf First version, 2012 (application/pdf)

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