Fundamentals and Optimal Institutions: The case of US sports leagues

Martín González Eiras (), Nikolaj A. Harmon () and Martín Rossi
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Martín González Eiras: University of Copenhagen
Nikolaj A. Harmon: University of Copenhagen
Authors registered in the RePEc Author Service: Martin Gonzalez-Eiras

No 128, Working Papers from Universidad de San Andres, Departamento de Economia

Abstract: To shed light on the relation between fundamentals and adopted institutions we examine institutional choice across the \Big Four" US sports leagues. Despite having very similar business models and facing the same economic and legal environment, these leagues exhibit large differences in their use of regulatory institutions such as revenue sharing, salary caps or luxury taxes. We show, theoretically and empirically, that these institutional differences can be rationalized as optimal responses to differences in the fundamental characteristics of the sports being played. This provides a cautionary tale against trying to transplant successful institutions across different economic settings.

Keywords: regulations; institutional choice; sport economics; win probability (search for similar items in EconPapers)
JEL-codes: D02 L10 L83 O17 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2017-01, Revised 2017-01
New Economics Papers: this item is included in nep-spo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://webacademicos.udesa.edu.ar/pub/econ/doc128.pdf First version, 2017 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:sad:wpaper:128

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