| Abstract: |
This paper studies intercollegiate athletics in the context of the theory of
cartels. Some point to explicit attempts by the National Collegiate Athletic
Association (NCAA) to restrict output and payments for factors of production
as evidence of cartel behavior. Others argue that such limits enhance product
quality by preserving amateurism. I find that the NCAA’s compensation limits
on athletes lead to high levels of rents from the entertainment revenues
produced by the athletes. The athletes producing these rents are
disproportionately African- American, while the beneficiaries are primarily
white. The rents are typically spent on coaches’ salaries, facilities, and
nonrevenue sports. Although athletic departments considered as businesses lose
money on average, there is some evidence, although not unanimous, that they
generate alumni contributions, state appropriations, and additional student
applications. |