Subsidies as incentive mechanisms in sports

Rodney Fort
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Rodney Fort: Department of Economics, Washington State University, Pullman, WA 99164-4741, USA, Postal: Department of Economics, Washington State University, Pullman, WA 99164-4741, USA

Managerial and Decision Economics, 2004, vol. 25, issue 2, 95-102

Abstract: Applying even the most fundamental public choice principles suggests that subsidies to sports team owners will be inversely related to ticket prices. The primary aim of this paper is to demonstrate the impact of such an inverse relationship on the pricing behavior of owners. Theory shows that if either the rent or concessions|parking response by policy makers is elastic (percentage change in subsidy is greater than the percentage change in prices by teams), then the other one cannot be. A (very) cursory look at readily available NFL data lends support to the theory, at least for single-use stadiums. The outcomes here may inform any future analysis that extends the idea into the full-blown analysis of the politics of subsidies and for those interested in the rationing by waiting that often occurs at sports events. Copyright © 2004 John Wiley & Sons, Ltd.

Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:25:y:2004:i:2:p:95-102

DOI: 10.1002/mde.1109

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