BIDDING TILL BANKRUPT DESTRUCTIVE COMPETITION IN PROFESSIONAL TEAM SPORTS

Authors

  • JAMES D. WHITNEY

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    • *Associate professor, Occidental College. I wish to thank Ed Earl for his research efforts, Manuel Pastor for his computer software assistance, and Stephen Bell, Susan Feigenbaum, Shane Greenstein, James Lehman, Robert L. Moore, two anonymous referees and economics seminar participants at Occidental College, the Claremont Graduate School and the 1990 WEA International Conference for their valuable comments on earlier drafts of this paper.


Abstract

The analysis and evidence here suggest that the market for star athletes in professional sports could be subject to “destructive competition”—a competitive process which drives some participants from a market even though it is inefficient for them to leave. When pursuing a league championship, the talent which turns an average team into a contender contributes disproportionately to the team's success. Teams which fail to earn enough on the last stars they sign to offset losses on their inframarginal talent will abandon a competitive market for star athletes. Other situations that involve input rivalry between producers might yield similar results.

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