The impact of the luxury tax on competitive balance in Major League Baseball

Gbenga Ajilore and Joshua Hendrickson ()
Additional contact information
Joshua Hendrickson: Wayne State University of Toledo

No 727, Working Papers from International Association of Sports Economists, North American Association of Sports Economists

Abstract: There has been much discussion recently in the world of professional sports about competitive balance. As more is focused on the growing disparity between large market and small market teams, one must ask whether the luxury tax, as implemented by Major League Baseball, has had its intended effect. This paper adds to the literature on competitive balance by developing measures to quantify competitiveness at the individual team-level. We estimate a model analyzing the impact of the luxury tax on competitive balance. The results show that the luxury tax is beginning to have the intended impact on competitive balance.

Keywords: sports economics; Major League Baseball; Luxury Tax (search for similar items in EconPapers)
JEL-codes: L83 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2007-10
New Economics Papers: this item is included in nep-spo
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Citations: View citations in EconPapers (1)

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http://web.holycross.edu/RePEc/spe/AjiloreHendrickson_LuxuryTax.pdf Paper presented at the 7th Annual IASE Conference in Ottawa, Ontario, June 2005 (application/pdf)
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Working Paper: The impact of the luxury tax on competitive balance in Major League Baseball (2005)
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