Superstars in Team Sports: An Economic Model

Harashima, Taiji (2018): Superstars in Team Sports: An Economic Model.

Abstract

In professional sports, superstars can earn extremely high incomes compared with those of other players. The existence of superstars in team sports is interesting because, unlike in individual sports, it is the teams that compete, not the individual players. This paper examines the mechanism of how an individual player can be a superstar even in the context of team sports. The key to the mechanism is that the probability of winning differs tremendously depending on whether or not a team has top-ranked players (i.e., those with relatively high abilities). This factor, combined with the effect of ranking preference, means that the salaries of players increase exponentially from the bottom- to the top-ranked player. As a result, a top-ranked player can be a superstar even in team sports.

• Item Type: MPRA Paper
• Language: English
• Keywords: Superstar; Team sport; Income inequality; Ranking Value; Ranking preference; Monopoly; Monopoly profit
• Subjects: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D42 - Monopoly; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General; L - Industrial Organization > L8 - Industry Studies: Services > L83 - Sports ; Gambling ; Restaurants ; Recreation ; Tourism

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