Title
Measuring Market Power in Professional Baseball, Basketball, Football, and Hockey
Campus Units
Economics
Document Type
Article
Publication Version
Submitted Manuscript
Publication Date
2020
Journal or Book Title
The American Economist
Volume
65
Issue
2
First Page or Article ID Number
214
Last Page
231
DOI
10.1177/0569434520941505
Abstract
Using Forbes magazine’s estimates of the current value and revenues of professional sports teams, we derive a long-run variant of the Lerner Index. We apply the strategy to professional teams in baseball, basketball, football, and hockey over the 2006–2019 period. All teams have positive and significant price-cost margins over the entire period. Analysis of variance shows that local market factors and past team performance have less impact on a team’s market power than do common league-wide effects. The strongest market power is in leagues with more aggressive revenue sharing policies. Price-cost margins are higher for professional teams in North American than for the most valuable European soccer teams, consistent with the stronger exemption from antitrust law in the United States and the weaker revenue sharing policies in Europe.
JEL Classification
L43, L13, L83
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Copyright Owner
The Author(s)
Copyright Date
2020
Language
en
File Format
application/pdf
Recommended Citation
Healy, Gerald T. III; Tan, Jing Ru; and Orazem, Peter F., "Measuring Market Power in Professional Baseball, Basketball, Football, and Hockey" (2020). Economics Publications. 771.
https://lib.dr.iastate.edu/econ_las_pubs/771
Comments
This is a working paper of an article published as Healy III, Gerald T., Jing Ru Tan, and Peter F. Orazem. "Measuring Market Power in Professional Baseball, Basketball, Football, and Hockey." The American Economist 65, no. 2 (2020): 214-231. doi: 10.1177/0569434520941505. Posted with permission.