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Revenue Sharing and Competitive Balance in a Dynamic Contest Model
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Revenue Sharing and Competitive Balance in a Dynamic Contest Model
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Journal Article
Revenue Sharing and Competitive Balance in a Dynamic Contest Model
2010
Overview
This paper presents a dynamic model of talent investments in a team sports league with an infinite time horizon. We show that the clubs' investment decisions and the effects of revenue sharing on competitive balance depend on the following three factors: (i) the cost function of talent investments, (ii) the clubs' market sizes, and (iii) the initial endowments of talent stock. We analyze how these factors interact in the transition to the steady state as well as in the steady state itself.
