Owners incentives during the 2004-05 National Hockey League lockout

Jason Winfree

Applied Economics, 2009, vol. 41, issue 25, pages 3275-3285

Abstract: This study shows that firm owners can indirectly benefit from work stoppages if they own other firms in substitute industries and gain market power for those other firms. The incentives of the owners are examined with a model of cross-ownership cartels and data from professional sports. Assuming that various professional sport events are substitutes, owners may increase profits by eliminating competition, even if they own the competition. This study shows that the recent National Hockey League (NHL) lockout caused a statistically significant increase in attendance for the National Basketball Association and junior hockey leagues. Given that many NHL owners own teams in these substitutable leagues, this could be construed as anti-competitive behaviour and may have prolonged the NHL lockout and helped NHL owners in collective bargaining. Given the public investment in sports facilities and market power in professional sports, this analysis calls for cross-ownership across professional sports to be questioned.

Date: 2009

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