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on Sports and Economics |
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Issue of 2007‒09‒09
three papers chosen by Joao Carlos Correia Leitao University of the Beira Interior |
| By: | Martin Grossmann (Institute for Strategy and Business Economics, University of Zurich); Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | This paper presents a dynamic model of talent investments where two clubs compete in each period with respect to a contest prize. We show that aggregate talent stocks of both clubs converge to an identical level such that competitive balance is assured in the steady state as long as league prizes are identical for clubs. In the transition the dynamics are mainly influenced by the elasticity of marginal costs. Finally, we generalize the static results of Szymanski and Kesenne (2004): It is possible to have a persistent inequality in team qualities and revenue sharing decreases competitive balance if clubs have different market potentials. |
| Keywords: | Contest, Sports Economics, Competitive Balance, Revenue Sharing |
| JEL: | L83 D92 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0070&r=spo |
| By: | Martin Grossmann (Institute for Strategy and Business Economics, University of Zurich); Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | This paper presents a two-period model of talent investments where two clubs compete with respect to a contest prize. We show that two qualitatively different types of equilibria are possible using a closed-loop approach with strictly convex costs: The large market club invests in both periods more than the small market club or the small market club invests in both periods more than the large market club. In case of an open-loop approach with strictly convex costs, however, the large market club always invests more. The open-loop and closed-loop equilibria coincide if costs are linear. |
| Keywords: | contest, open-loop and closed-loop equilibrium, sports leagues |
| JEL: | L83 D92 L13 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0069&r=spo |
| By: | Martin Grossmann (Institute for Strategy and Business Economics, University of Zurich); Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich) |
| Abstract: | In this paper, we discuss a manager's allocation problem. Two managers allocate their heterogeneous employees - each manager allocates two high types and two low types - in groups of two in order to compete for an exogenous contest prize in a two period model. There are three possibilities of groups' constellation depending on manager's allocation decision: Strong groups (two high types), balanced groups (one high and one low type) and weak groups (two low types). These allocations determine the managers’ performance. We show that equilibria in a simultaneous as well as in a sequential game only depend on the difference of the heterogeneous groups' outputs. Furthermore, we show that there is no second mover advantage according this model. Therefore, firms' performances are independent of the model's timing. A typical application of the model fits to coaches’ decisions in ice hockey concerning the optimal constellation of the first, second, third (and so forth) lines. |
| Keywords: | Contest, Sports Economics |
| JEL: | L83 D92 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:iso:wpaper:0071&r=spo |