Bidding for talent in sport

Roberto Burguet, Jozsef Sakovics

Research output: Contribution to journalArticlepeer-review

Abstract

We present a novel micro-structure 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 non-specific club objective with an endogenously derived trade-off between pecuniary and non-pecuniary benefits.
Original languageEnglish
Pages (from-to)85-102
JournalEconomic Inquiry
Volume57
Issue number1
Early online date17 Sep 2018
DOIs
Publication statusPublished - 4 Dec 2018

Keywords

  • competitive balance
  • competitive foreclosure
  • contested workers
  • labor auction
  • procurement in sport

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