英文缩写大全Rottenberg and the Economics of Sport after 50 years: An Evaluation Peter J. Sloane, University of Wales Swana and IZA
March 2005
ABSTRACT
Simon Rottenberg’s minal 1956 article in the Journal of Political Economy, 1956, is generally accepted as the starting point for the development of the economics of sport. While he recognid that certain features of professional sports leagues were unusual he saw little reason to treat this industry any differently from a conventional industry. He discuss the importance of uncertainty of outcome, the monopsonistic nature of the labour market, the nature of the product and demand (attendances). He considers alternatives to the rerve clau, such as equal revenue sharing, maximum salary limits, equal market franchi distribution and roster limits. Each of the is rejected in favour of a free market solution which, on the basis of the invariance principle, he suggests will perform just as well as the rerve clau in allocating talent to where it is most productive. The ensuing literature has focud on all the issues, many of which have created considerable debate amongst sports economists. In particular the assumption of profit maximisation has been challenged and a divergence
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起绉of views, reflected in the so-called North American and European models of sports leagues has emerged. Over the last 50 years sports leagues have expanded, TV markets have opened up and legal challenges to existing practices have multiplied. This paper eks to evaluate Rottenberg’s contribution to a rapidly expanding field and to judge its relevance today.
JEL classification: J0, L0, L8
Keywords; Sport, Monopsony, Monopoly Power
p.j.sloane@swana.ac.uk
1. INTRODUCTION
The economics of sport can truly be said to have begun with Simon Rottenberg’s minal paper on the baball players market in the Journal of Political Economy 1956, some eight years before Walter Neale’s well known paper in the Quarterly Journal of Economics (which failed to cite it), with J.C.H. Jones’ contribution on the National Hockey League appearing a year later in the Canadian Journal of Economics. In Europe the first academic journal papers, both on football, were by Sloane (1969) and (1971). Surprisingly Rottenberg’s 1956 paper appears to have been his sole contribution
to the subject, apart from an invited paper in the founding issue of the Journal of Sports Economics (Rottenberg, 2000). The same journal also included another invited paper on Rottenberg’s contribution to celebrate the golden anniversary of the original paper, (Fort, 2005). That paper adopted a purely North American perspective with all 25 references being US in origin. This paper attempts to complement Fort’s paper by considering the European model alongside the North American one and attempting to identify which issues remain the most contentious in the field.
meleeThe defining feature of Rottenberg’s paper was his belief that the economics of professional sports leagues could be analyd using the same economic framework as for any other industry. He did, however, recogni two unusual characteristics – the fact that monopsony power took an extreme form in this industry and that competitors must be of approximately equal size if any of them are to be successful. He did not consider the possibility of non-profit maximising behaviour, though in his 2000 paper he does note that investors might derive psychic income from their involvement and thus be prepared to accept loss.
2. THE KEY FEATURES OF PROFESSIONAL TEAM SPORTS
Rottenberg sketched out the main features of major league baball and the, described by Fort as
the eleven anchors of the sports economics literature, have been taken to apply to other professional team sports leagues. They are :-erp是什么意思
1)the labour market is monopsonistic.
trampling2)the product market is monopolistic.
3)there are rich and poor clubs, bad on attendances as oppod to population
size.
bbc下载4)attendances are a function of some key variables.
5)the rerve clau does not provide an equal distribution of talent.
6)the advantages of the draft system are largely illusory.
7)the prospect of very high salaries attracts an over-abundance of players,
leading to wide salary dispersion.
8)baball team owners are rational profit maximirs.
9)differences in the quality of rivals should not be ‘too great’ in order to
produce a successful product (uncertainty of outcome).
10)the free market is as efficient as the rerve clau in terms of resource
allocation (the invariance principle).
11)the demi of the rerve clau would have no impact on the amount of
training or the quality of play
(a)THE INVARIANCE PRINCIPLE
The invariance principle (IP) and uncertainty of outcome (UOO) are crucial, but controversial, elements of the economics of sport. Fort refers to the former as “the rock solid foundation of much of the analysis in sports economics” and points out that it is an application of the Coa Theorem (CT) which actually preceded the
publication of the latter by some four years. The Coa Theorem itlf states that in competitive mar
kets and given that resources are freely exchangeable the distribution of their ownership among agents is irrelevant to ensuring that they are ud efficiently. This assumes not only perfect competition, perfect information, and the abnce of transaction costs1, but also the abnce of wealth and income effects.2 It is at least questionable whether the assumptions hold in professional team sports, given the prence of product market monopoly. In such a ca it is possible that the theory of the cond best (Lancaster and Lipy, 1956)3 applies. This theory suggests that in the abnce of being able to obtain all the conditions necessary for the existence of Pareto optimality then the cond best position can only be reached by departing from the other Paretian conditions. In the team sports context Rottenberg’s claim on page 258 that “free markets would give as good aggregate results as any other kind of market …… in which all firms must be nearly equal if each is to prosper”, (my italics) might be challenged. Rottenberg calls upon the law of diminishing returns and economies of scale to support his argument. In the former ca, if a larger club continues to purcha additional players the total product will eventually increa at a decreasing rate and the latter occurs when one team becomes so superior to the rest that interest wanes. Both of the outcomes depend on 1 It has recently been shown that ex ante transactions costs may lead to a failure of the Coa Theorem or at least the strong version in which the theorem is interpreted as guaranteeing an efficient outcome regardless of the way in which property rights are
assigned. Anderlini and Felli (2001 and 2006) show that there is always an equilibrium for both players never to pay ex ante costs or agree on a division of the potential surplus, although the ex ante costs are strictly lower than the surplus itlf. Moreover under certain assumptions this is the unique equilibrium outcome. One of the assumptions is that the distribution of the ex ante transactions costs across the players is sufficiently asymmetric. This ems quite likely in the context of European leagues in particular.
assoonas2 There have hardly been any discussions in the ensuing literature of whether the assumptions are likely to apply in practice: Cymrot, Dunlevy and Even (2001) did, however, examine changes in the competitive environment to test whether this affected the migration pattern of players to where their individual potential productivity gains from changing teams were greatest, which is a direct test of the Coa Theorem. Since both free agent and non free agent players are equally responsive to predicted gains from migration this is taken as support for the Coa Theorem. However, they recogni that the results would be more convincing if they were supported by more years of data and others have found contrary results (e.g. Daly and Moore, 1981).
3 Note this was published in the same year as Rottenberg’s paper and he may not have been aware of it.
uncertainty of outcome being important. Thus, profit maximisation requires in this situation that star players be moved to less successful clubs. There are two problems here. First, neither the fans nor the players will be happy with the sale of good players to inferior clubs. Second, if there is a large disparity in the size of clubs, the marginal revenue products may be incapable of being equalid across clubs.4 Indeed, many smaller clubs maintain salary limits on the grounds that to pay more would lead to financial ruin. This is much more likely to be the ca in Europe than in North America, since in the former ca the larger size of leagues for a given population means that some clubs in the major leagues are very small. Further, leagues are organid within countries with disparate populations, and the most successful clubs in each country compete in lucrative European wide club competitions. This means that the more successful club in small countries may need to be ‘too strong’ for domestic competitions to have any hope of being successful in European wide competitions. Under the circumstances it may be necessary to rig the market to ensure that there is sufficient sporting competition.
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Rottenberg neglected the possibility that externalities might frustrate the efficient allocation of playing skills. This possibility was first raid by Neale (1964), but has also been emphasid by a number of other authors. Thus, Demmert (1973) notes that increas in the skill level of above average tea
原来如此 日语ms will result in diconomies which are external to the particular club but internal to the league as a whole5, while the rever applies to improvements in the skill levels of below average teams. Both Demmert and Daly and Moore (1981) doubt whether clubs will take into account such
4 Thus, in North America Burger and Walters (2003) find that baball teams in the largest markets value a given player six times as much as tho in the smallest markets, suggesting no inherent tendency towards competitive balance.
5 Vrooman (1996) calls this the Yankee paradox
externalities as the transactions costs associated with the effects are sufficiently large in an n >2 team league to make this unlikely. A further problem is that a player’s talent may be team specific (or what Vrooman refers to as the irreversibility proposition).6 Added to this is the likelihood that there may be a tendency to overbid for players (the winners’ cur) as information asymmetries and uncertainty may imply that the team which values a player’s worth correctly has less chance of signing him than a team which overestimates his value (Cassing and Douglas, 1990). More recently Whitney (2005) has shown that there is a difference between trading players already in the league and signing players from outside the league (a common phenomenon in Europe). Restricting transa
ctions to the external market leads to a more even distribution of playing skills than recour to the internal market as this does not directly diminish the talent level of other clubs, but instead shifts resources away from the league’s revenue maximising optimum. This leads Whitney to dispute El Hodiri and Quirk’s asrtion that syndicated control and decentralid franchis generate the same distribution of talent. In a n >2 team league decentralid leagues become less competitively balanced. He also shows that talent migration from weaker to stronger teams unambiguously rais the winning percentages of third party teams, who gain more from improved performance against the weaker of the two teams than they lo from the weaker performance against the stronger team. This, however, makes no allowance for uncertainty of outcome in the context of the championship race. Yet, it points to the fact that one cannot always generali from a two team league model to an n >2team league. Further, as Zimbalist (2002)
6 Kendall (2003) has recently examined the related issue of spillovers in relation to basketball. Under certain conditions spillovers may cau a worker’s marginal productivity to differ across different teams. His empirical results suggest significant spillovers exist in relation to offensive productivity, but there is little evidence that market sorting bad on such spillovers exists.
