Revenue Sharing and Competitive Balance in a Dynamic Contest Model

Revenue Sharing and Competitive Balance in a Dynamic Contest Model This paper presents a dynamic model of talent investments in a team sports league with an infinite time horizon. We show that the clubs’ investment decisions and the effects of revenue sharing on competitive balance depend on the following three factors: (i) the cost function of talent investments, (ii) the clubs’ market sizes, and (iii) the initial endowments of talent stock. We analyze how these factors interact in the transition to the steady state as well as in the steady state itself. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Revenue Sharing and Competitive Balance in a Dynamic Contest Model

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Publisher
Springer Journals
Copyright
Copyright © 2010 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-009-9236-x
Publisher site
See Article on Publisher Site

Abstract

This paper presents a dynamic model of talent investments in a team sports league with an infinite time horizon. We show that the clubs’ investment decisions and the effects of revenue sharing on competitive balance depend on the following three factors: (i) the cost function of talent investments, (ii) the clubs’ market sizes, and (iii) the initial endowments of talent stock. We analyze how these factors interact in the transition to the steady state as well as in the steady state itself.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Jan 22, 2010

References

  • Modelling professional sports leagues: An industrial organization approach
    Cyrenne, P.
  • The effect of gate revenue sharing on social welfare
    Dietl, H.; Lang, M.
  • Strategic behavior in contests
    Dixit, A.

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