nep-spo New Economics Papers
on Sports and Economics
Issue of 2016‒05‒08
one paper chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. To the Highest Bidder: The Market for Talent in Sports Leagues By Roberto Burguet; József Sákovics

  1. By: Roberto Burguet; József Sákovics
    Abstract: We present a realistic and novel micro-structure for the market for athletes in league sports. In our trading mechanism the clubs bid for individual players, internalizing the effect that a player not hired might play for the competition. For inelastic talent supply, our (wage-minimizing) equilibrium supports the Coasian results of Rottenberg (1956) and Fort and Quirk (1995): talent allocation is independent of initial "ownership" and revenue sharing arrangements. When talent supply is elastic, revenue sharing decreases the aggregate amount of talent hired. This negative effect on the talent level may be efficiency enhancing when the competition for talent results in excess talent being hired. For the first time in the literature, we carry out our entire analysis using a newly formulated, unified club objective, incorporating both pecuniary and non-pecuniary benefits.
    Keywords: sports leagues, club objectives, revenue sharing
    JEL: D43 J31 L13 L22 L83
    Date: 2016–04

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