The Economics of Competitive Sports

The Economics of Competitive Sports

New Horizons in the Economics of Sport series

Edited by Plácido Rodríguez, Stefan Késenne and Ruud Koning

The essence of any sports contest is competition. The very unpredictability of a sporting outcome distinguishes it from, say, an opera performance. This volume presents a state of the art overview of the economics of competitive sport along two main themes. In the first part, the discussion centers on the organization of sports and competition. The second part deals with the competitive balance, rewards and outcomes of the actual contests.

Chapter 2: The pyramid market of the European Sports Model: the economics of federations

Fernando Tenreiro

Subjects: economics and finance, sports


The chapter discusses the economy of sport federations as the instrument of economic efficiency of the European Sports Model. The analysis argues that sport federations are monopolies as: first, the peculiarity of sport products and three production functions define federations as monopolies that compete between each other individually for the production of a single sport good; second, some federations generate a critical mass of consumers allowing them to take-off and throughout its own human technology to produce world champions, as a top-of-the-class good, consumers predispose to consume worldwide. The chapter suggests that the private regulation of sport federations, maximizing production and co-production of sport goods and internalizing external benefits generates social benefits close to social optimum, according to Coase (1960). As a consequence public regulation should support the monopoly competition of sport federations.

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