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

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.

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Copyright Owner

The Author(s)

Language

en

File Format

application/pdf

Published Version

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