Sportsman Leagues

John Vrooman

Scottish Journal of Political Economy, 2015, vol. 62, issue 1, 90-115

Abstract: type="main" xml:id="sjpe12066-abs-0001">

This paper compares duopsony profit-maximization and sportsman leagues and analyzes the effects of revenue sharing in both leagues. This involves formulation of a duopsony model that compares game-theoretic approaches and price-taking models. This duopsony game is played in open and closed talent markets with a supply function that approaches perfect inelasticity in the limit. The analysis explores welfare optimality of competitive balance, fan preference and revenue sharing. Revenue sharing minimizes payrolls and reduces overall talent in profit-max leagues. This leads to the conclusion that a sportsman league with optimal revenue sharing is welfare superior.

Date: 2015
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