Review of Industrial Organization 19: 257–260, 2001.
The Economics of Sports, William S. Kern, editor, Kalamazoo, MI: W.E. Upjohn
Institute for Employment Research, July, 2000, 146 pages, $33 (cloth), $14 (paper).
The Economics of Sports is a collection of six papers edited by William S. Kern.
These papers were originally presented as a lecture series at Western Michigan
University in the 1998–99 academic year. Individually, the authors are well recog-
nized for their professional research in sports economics. However, the six papers
are strictly on an individual basis. There is no overall design or coordination of the
contents of the book. This makes an overview summary of the book difﬁcult. But
the limited number of papers makes an individual review of each paper feasible.
Rod Fort’s paper, “Market Power in Pro Sports”, is a wide-ranging discussion
of many contemporary problems associated with professional sports leagues. Some
of the obvious ones include high players’ salaries, labor/management relations,
competitive imbalance due to unequal size of home markets, and public subsidies
for stadiums. Fort’s hypothesis is that these problems have a common cause: the
monopoly market power of these leagues. Further aggravating these problems is
the tacit support for this monopoly power at all levels of government.
Fort’s solution is increased competition. As noted by the author, this suggestion
is obvious to professional economists. So with the tools of microeconomics, he
easily demonstrates the many good things that would be expected to result from
a substantial increase in market competition. For example, Fort argues that the
monopoly rents in the industry and the stadium subsidies would both collapse. He
also points out that all viable locations would have a team, and large metropolitan
areas may have numerous teams.
The ambitious scope of Fort’s paper must be balanced against inevitable sim-
pliﬁcations. The extent of monopoly exploitation is perhaps not as great as Fort
suggests because potential rival leagues continually lurk in the wings ready to
respond to a favorable combination of monopoly rents and viable markets without
teams. Professional sports leagues are aware of these threats, and it is plausible to
argue that their response has been self-imposed limits on their exploitation of fans.
Monopoly restrictions on the quantity of teams may be a reality, but it is not totally
clear that market competition would call forth a large number of new teams and/or
leagues. To what degree are the product markets of professional sports leagues