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Type Conference or Workshop Paper
Scope Discipline-based scholarship
Published in Proceedings No
Title A contest model of a professional sports league with two-sided markets
Organization Unit
Authors
  • Helmut Max Dietl
  • Tobias Duschl
  • Egon Franck
  • Markus Lang
Presentation Type lecture
Item Subtype Original Work
Refereed Yes
Status Published in final form
Language
  • English
ISSN 1660-1157
Event Title 86th Western Economics Association International (WEAI)
Event Type conference
Event Location San Diego (USA)
Event Start Date July 2 - 2011
Event End Date July 2 - 2011
Series Name Institute for Strategy and Business Economics Working Paper Series
Number 114
Publisher University of Zurich
Abstract Text This paper develops a model of a professional sports league with network externalities by integrating the theory of two-sided markets into a contest model. In professional team sports, the competition of the clubs functions as a platform that enables sponsors to interact with fans. In these club-mediated interactions, positive network effects operate from the fan market to the sponsor market, while positive or negative network effects operate from the sponsor market to the fan market. Clubs react to these network effects by charging higher (lower) prices to sponsors (fans). The size of these network effects also determines the level of competitive balance within the league. We further show that clubs benefit from stronger combined network effects through higher profits and that network externalities can mitigate the negative effect of revenue sharing on competitive balance. Finally, we derive implications for improving competitive balance by taking advantage of network externalities.
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Additional Information Also presented at 35. Workshop der “Kommission Organisation”, Berlin, 23. - 25. February 2011