Bidding for Talent in Sport

18 Pages Posted: 5 Dec 2018

See all articles by Roberto Burguet

Roberto Burguet

Instituto de Analisis Economico, CSIC

Jozsef Sakovics

The University of Edinburgh

Date Written: January 2019

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 Classification: J4, L1, L2

Suggested Citation

Burguet, Roberto and Sakovics, Jozsef, Bidding for Talent in Sport (January 2019). Economic Inquiry, Vol. 57, Issue 1, pp. 85-102, 2019, Available at SSRN: https://ssrn.com/abstract=3295888 or http://dx.doi.org/10.1111/ecin.12712

Roberto Burguet (Contact Author)

Instituto de Analisis Economico, CSIC ( email )

UAB Campus
E-08193 Bellaterra
Spain
+34 93 580 6612 (Phone)
+34 93 580 1452 (Fax)

Jozsef Sakovics

The University of Edinburgh ( email )

30 Buccleuch Place
Edinburgh, EH8 9JT, Scotland
United Kingdom

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