THE PECULIAR EXTERNALITIES OF PROFESSIONAL TEAM SPORTS

The economics literature has long been divided regarding whether competing sports teams can achieve the same, efficient allocation of playing skills that a revenue‐maximizing league monopolist would choose despite the external effects the teams impose on each other in their pursuit of athletic talen...

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Bibliographic Details
Published in:Economic inquiry 2005-04, Vol.43 (2), p.330-343
Main Author: Whitney, James D.
Format: Article
Language:English
Subjects:
Analysis
Athletic recruitment
Competition
Competition (Economics)
Economic aspects
Economic theory
Equilibrium models
Game theory
Professional sports
Skills
Sport games
Strategic planning
Studies
Teams
United States
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Summary:The economics literature has long been divided regarding whether competing sports teams can achieve the same, efficient allocation of playing skills that a revenue‐maximizing league monopolist would choose despite the external effects the teams impose on each other in their pursuit of athletic talent. In this article an explicit consideration of the arbitrage incentives that underlie the marketing and pricing of playing skills indicates that decentralized franchises generally fail to allocate talent efficiently. For fans concerned about the championship prospects of their preferred team, the popular complaint has merit: “Big‐city teams win too much.”(JEL L83)
ISSN:0095-2583
1465-7295
DOI:10.1093/ei/cbi022