| Abstract: |
We present a realistic and novel micro-structure for the market for athletes
in league sports. In our trading mechanism the clubs bid for individual
players, internalizing the effect that a player not hired might play for the
competition. For inelastic talent supply, our (wage-minimizing) equilibrium
supports the Coasian results of Rottenberg (1956) and Fort and Quirk (1995):
talent allocation is independent of initial "ownership" and revenue sharing
arrangements. When talent supply is elastic, revenue sharing decreases the
aggregate amount of talent hired. This negative effect on the talent level may
be efficiency enhancing when the competition for talent results in excess
talent being hired. For the first time in the literature, we carry out our
entire analysis using a newly formulated, unified club objective,
incorporating both pecuniary and non-pecuniary benefits. |