BIDDING FOR TALENT IN SPORT

Abstract

We present a novel microstructure for the market for athletes. Clubs simultaneously target bids at the players, in (Nash) equilibrium internalizing whether—depending on the other clubs' bids—a player not hired would play for the competition. When talent is either scarce or has low outside options, we support—and generalize to heterogeneous players—the Coasian results of Rottenberg (1956) and Fort and Quirk (1995): talent allocation is efficient and independent of initial “ownership” and revenue sharing arrangements. We also characterize equilibria when talent is abundant (or has a high outside option). The analysis uses a nonspecific club objective with an endogenously derived trade-off between pecuniary and nonpecuniary benefits.(JEL J4, L1, L2).

Publication Date

1-1-2019

Publication Title

Economic Inquiry

Volume

57

Issue

1

Number of Pages

85-102

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1111/ecin.12712

Socpus ID

85053479365 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/85053479365

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