The Effect of Gate Revenue-Sharing on Social Welfare

Helmut Dietl and Markus Lang

No 60, Working Papers from University of Zurich, Institute for Strategy and Business Economics (ISU)

Abstract: This paper provides a theoretical model of a team sports league based on contest theory and studies the welfare effect of gate revenue-sharing. It derives two counter-intuitive results. First, it challenges the "invariance proposition" by showing that revenue-sharing reduces competitive balance and thus produces a more unbalanced league. Second, the paper concludes that a lower degree of competitive balance compared with the non-cooperative league equilibrium yields a higher level of social welfare and club profits. Combining both results, we conclude that gate revenue-sharing increases social welfare and club profits in our model.

Keywords: Revenue sharing; competitive balance; social welfare; team sports leagues (search for similar items in EconPapers)
JEL-codes: C72 D6 L83 M21 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2006, Revised 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/60_ISU_full.pdf First version, 2006 (application/pdf)

Related works:
Journal Article: THE EFFECT OF GATE REVENUE SHARING ON SOCIAL WELFARE (2008)
Working Paper: The Effect of Gate Revenue-Sharing on Social Welfare (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:iso:wpaper:0060

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