The contest success function has not received the attention it deserves in sports economics modeling, and the role of talent supply elasticity has not been fully recognized. We show that both the marginal product of talent in the production of winning and its marginal revenue product depend critically on the elasticity of talent supply and the form of the contest success function. For concave revenues from winning, the marginal revenue product of talent may slope upward so that the stability of equilibrium is lost. Only empirical analysis of the marginal product of talent ultimately will prove decisive on these issues.
Review of Industrial Organization – Springer Journals
Published: Feb 7, 2009
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