Simulation Evidence on Herfindahl-Hirschman Indices as Measures of Competitive Balance

Dorian Owen and Caitlin Owen ()
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Caitlin Owen: Department of Information Science, University of Otago, New Zealand

No 1715, Working Papers from University of Otago, Department of Economics

Abstract: Measurement of the degree of competitive balance, how evenly teams are matched, is central to the economic analysis of professional sports leagues. A common problem with competitive balance measures, however, is their sensitivity to the number of teams and the number of matches played by each team, i.e., season length. This paper uses simulation methods to examine the effects of changes in season length on the distributions of several widely used variants of the Herfindahl- Hirschman index applied to wins in a season. Of the measures considered, a normalized measure, accounting for lower and upper bounds, and an adjusted measure perform best, although neither completely removes biases associated with different season lengths.

Keywords: Herfindahl-Hirschman; Competitive balance; Simulation (search for similar items in EconPapers)
JEL-codes: C63 D63 L83 Z20 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2017-12, Revised 2017-12
New Economics Papers: this item is included in nep-ind and nep-spo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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http://www.otago.ac.nz/economics/research/otago671741.pdf First version, 2017 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:otg:wpaper:1715

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