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Revenue Sharing, Competitive Balance and the Contest Success Function

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  • Runkel Marco

    (University of Magdeburg,Magdeburg, Germany)

Abstract

This paper investigates revenue sharing in an asymmetric two-teams contest model of a sports league with Nash behavior of team owners. The innovation of the analysis is that it focuses on the role of the contest success function (CSF). In case of an inelastic talent supply, revenue sharing turns out to worsen competitive balance regardless of the shape of the CSF. For the case of an elastic talent supply, in contrast, the effect of revenue sharing on competitive balance depends on the specification of the CSF. We fully characterize the class of CSFs for which revenue sharing leaves unaltered competitive balance and identify CSFs ensuring that revenue sharing renders the contest closer.

Suggested Citation

  • Runkel Marco, 2011. "Revenue Sharing, Competitive Balance and the Contest Success Function," German Economic Review, De Gruyter, vol. 12(3), pages 256-273, August.
    • Handle: RePEc:bpj:germec:v:12:y:2011:i:3:p:256-273
    DOI: 10.1111/j.1468-0475.2011.00530.x
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    Cited by:

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    3. Jörg Franke & Christian Kanzow & Wolfgang Leininger & Alexandra Schwartz, 2013. "Effort maximization in asymmetric contest games with heterogeneous contestants," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 589-630, March.
    4. Ratul Lahkar & Saptarshi Mukherjee, 2022. "Optimal Large Population Tullock Contests," Working Papers 82, Ashoka University, Department of Economics.
    5. Aloys L. Prinz, 2019. "Indirect Evolution and Aggregate-Taking Behavior in a Football League: Utility Maximization, Profit Maximization, and Success," Games, MDPI, vol. 10(2), pages 1-12, May.

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    More about this item

    Keywords

    Revenue sharing; competitive balance; contest success function;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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