Uncertainty by regulation: Rottenberg׳s invariance principle

What has come to be called Rottenberg׳s (1956) “Invariance Principle” states that the same talent allocation would result in a profit-maximizing league with or without interventions often claimed in the name of furthering competitive balance (e.g., a player draft or a reservation system that granted...

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Bibliographic Details
Published in:Research in economics 2016-09, Vol.70 (3), p.454-467
Main Authors: Fort, Rodney, Maxcy, Joel, Diehl, Mark
Format: Article
Language:English
Subjects:
Competitive balance
Invariance principle
Regulation
Sports leagues
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Summary:What has come to be called Rottenberg׳s (1956) “Invariance Principle” states that the same talent allocation would result in a profit-maximizing league with or without interventions often claimed in the name of furthering competitive balance (e.g., a player draft or a reservation system that granted club owners complete control of the player׳s labor market). While the stuff of undergraduate classes on sports economics, the invariance principle goes virtually ignored in policy. We provide the basic modern theory of the invariance principle, review the empirical work on the topic, and apply meta-analysis thinking to derive future research ideas on this fundamental sports economics principle.
ISSN:1090-9443
1090-9451
DOI:10.1016/j.rie.2016.06.004