EconPapers    
Economics at your fingertips  
 

The Effect of Salary Caps in Professional Team Sports on Social Welfare

Helmut Dietl, Markus Lang () and Alexander Rathke ()

No 16, Working Papers from University of Zurich, Center for Research in Sports Administration (CRSA)

Abstract: Increasing financial disparity and spiralling wages in European football have triggered a debate about the introduction of salary caps. This paper provides a theoretical model of a team sports leagues and studies the welfare effect of salary caps. It shows that salary caps will increase competitive balance and decrease overall salary payments within the league. The resulting effect on social welfare is counter-intuitive and depends on the preference of fans for aggregate talent and for competitive balance. A salary cap that binds only for large market clubs will increase social welfare if fans prefer aggregate talent despite the fact that the salary cap will result in lower aggregate talent. If fans prefer competitive balance, on the other hand, any binding salary cap will reduce social welfare.

Keywords: Salary Caps; Social Welfare; Competitive Balance; Team Sports League (search for similar items in EconPapers)
JEL-codes: C72 D6 L83 M21 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2007-08
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://repec.business.uzh.ch/RePEc/rsd/CRSA_WPS/16_CRSA_full.pdf (application/pdf)

Related works:
Journal Article: The Effect of Salary Caps in Professional Team Sports on Social Welfare (2009) Downloads
Working Paper: The Effect of Salary Caps in Professional Team Sports on Social Welfare (2007) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rsd:wpaper:0016

Access Statistics for this paper

More papers in Working Papers from University of Zurich, Center for Research in Sports Administration (CRSA) Contact information at EDIRC.
Bibliographic data for series maintained by IBW IT Support ().

 
Page updated 2022-10-05
Handle: RePEc:rsd:wpaper:0016