Revenue Sharing and Competitive Balance in a Dynamic Contest Model

Grossmann, Martin; Dietl, Helmut; Lang, Markus

doi:10.2139/ssrn.1017855

Cited by 11 publications

(17 citation statements)

References 27 publications

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“…Similar to Grossmann et al (2010), we establish Proposition 1, which summarizes the steady state results for a general, strictly convex cost function.…”

Section: Optimality Conditions and Steady Statesmentioning

confidence: 91%

“…Allowing that efforts accumulate over time, makes the analysis significantly more complicated. Most closely related to our work is the paper by Grossmann et al (2010), which analyzes the investment behavior of clubs in a dynamic contest model of a professional team sports league with talent accumulation. The authors focus on linear and quadratic costs as well as on the effect of revenue sharing on competitive balance.…”

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confidence: 99%

“…Moreover, they find that revenue sharing decreases the speed of convergence to the steady state if investment costs for playing talent are quadratic. In order to derive their results, Grossmann et al (2010) use a "shooting method" to simulate their model for quadratic costs. In this article, we extend and generalize the model of Grossmann et al (2010) by assuming a general convex cost function instead of linear and quadratic costs.…”

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confidence: 99%

“…In order to derive their results, Grossmann et al (2010) use a "shooting method" to simulate their model for quadratic costs. In this article, we extend and generalize the model of Grossmann et al (2010) by assuming a general convex cost function instead of linear and quadratic costs. This generalization of the cost function requires a linearization of the accumulation and Euler equations around the steady state since the "shooting method" is not applicable.…”

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confidence: 99%

“…To solve the model, we follow the approach in Grossmann et al (2010) and concentrate on open-loop equilibria due to the following two reasons:…”

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confidence: 99%

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Transitional Dynamics in a Tullock Contest with a General Cost Function

Grossmann

Lang

Dietl

2011

The B.E. Journal of Theoretical Economics

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This paper constructs and analyzes open-loop equilibria in an infinitely repeated Tullock contest in which two contestants contribute efforts to accumulate individual asset stocks over time.To investigate the transitional dynamics of the contest in the case of a general cost function, we linearize the model around the steady state. Our analysis shows that optimal asset stocks and their speed of convergence to the steady state crucially depend on the elasticity of marginal effort costs, the discount factor and the depreciation rate. In the case of a cost function with a constant elasticity of marginal costs, a lower discount factor, a higher depreciation rate and a lower elasticity imply a higher speed of convergence to the steady state. We further analyze the effects of second prizes in the contest. A higher prize spread increases individual and aggregate asset stocks, but does not alter the balance of the contest in the long run. During the transition, a higher prize spread increases asset stocks, produces a more balanced contest in each period and increases the speed of convergence to the steady state.

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“…Similar to Grossmann et al (2010), we establish Proposition 1, which summarizes the steady state results for a general, strictly convex cost function.…”

Section: Optimality Conditions and Steady Statesmentioning

confidence: 91%

mentioning

confidence: 99%

mentioning

confidence: 99%

mentioning

confidence: 99%

“…To solve the model, we follow the approach in Grossmann et al (2010) and concentrate on open-loop equilibria due to the following two reasons:…”

mentioning

confidence: 99%

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Transitional Dynamics in a Tullock Contest with a General Cost Function

Grossmann

Lang

Dietl

2011

The B.E. Journal of Theoretical Economics

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Competition Between Sports Leagues: Theory and Evidence on Rival League Formation in North America

Che

Humphreys

2014

Rev Ind Organ

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The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. AbstractWe analyze the formation of rival leagues and deterrence by incumbent leagues in professional team sports, which is one of the least studied forms of competition in sports. We first survey the economic history of professional sport leagues in North America and develop stylized facts about rival league formation. We then develop a game-theoretical model to explain some of these interesting stylized facts, showing that if the bargaining power of the incumbent league is sufficiently small -i.e., less than a certain cutoff -the incumbent should choose expansion to deter the rival league formation; otherwise, it is optimal for the incumbent league to allow a rival league formation and then merge with it, conditional on rival league success. We further show that the incumbent league may pay players relatively high salaries as an alternative way to deter formation by a rival league.JEL Codes: D42, L12, L83

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Financial fair play and competitive balance in the Premier League

Freestone

Manoli

2017

SBM

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Purpose: The introduction of financial fair play regulations in 2011 was accompanied by criticism that they would have an adverse effect on competitive balance in European football. Counterpoints were also expressed, suggesting that the opposite would occur; that they would actually increase competitive balance through reducing the importance of financial power. The lack of clarity and cohesion on this issue prompted this study, which examines the effect FFP has had on competitive balance in the English Premier League. Design: The analysis conducted uses the Herfindahl Index of Competitive Balance as the primary method, and is supported by standard deviation of points analysis and a Scully-Noll ratio analysis, which together provide an indication of the level of competitive balance for each of the past 21 seasons, from 1995/96 to 2015/16. This examination allows for the trends in competitive balance to be identified, with emphasis drawn on the seasons after the introduction of the regulations. Findings: The results provide no indication that FFP regulations have resulted in a decline in competitive balance in the EPL, instead hinting that a positive effect may have been caused. This positive effect exceeds the primary aim of the regulations and underlines their importance in the future stability of club football. Originality/value: While underlining the need for further research on the topic, this study provides the first insights to the effects of FFP regulations on competitive balance in the EPL. These insights would support the view that FFP initiatives have begun to shift the focus of sporting competition away from financial strength towards more natural means of competition such as efficiency, innovation and good management.

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Revenue Sharing and Competitive Balance in a Dynamic Contest Model

Cited by 11 publications

References 27 publications

Transitional Dynamics in a Tullock Contest with a General Cost Function

Transitional Dynamics in a Tullock Contest with a General Cost Function

Competition Between Sports Leagues: Theory and Evidence on Rival League Formation in North America

Financial fair play and competitive balance in the Premier League

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