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Uncertainty by regulation: Rottenberg׳s invariance principle

Rodney Fort, Joel Maxcy () and Mark Diehl

Research in Economics, 2016, vol. 70, issue 3, 454-467

Abstract: What has come to be called Rottenberg׳s (1956) “Invariance Principle” states that the same talent allocation would result in a profit-maximizing league with or without interventions often claimed in the name of furthering competitive balance (e.g., a player draft or a reservation system that granted club owners complete control of the player׳s labor market). While the stuff of undergraduate classes on sports economics, the invariance principle goes virtually ignored in policy. We provide the basic modern theory of the invariance principle, review the empirical work on the topic, and apply meta-analysis thinking to derive future research ideas on this fundamental sports economics principle.

Keywords: Regulation; Competitive balance; Invariance principle; Sports leagues (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1016/j.rie.2016.06.004

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