THE COMBINED EFFECT OF SALARY RESTRICTIONS AND REVENUE SHARING IN SPORTS LEAGUES

Many major sports leagues are characterized by a combination of cross‐subsidization mechanisms like revenue‐sharing arrangements and payroll restrictions. Up to now, the effects of these policy tools have only been analyzed separately. This article provides a theoretical model of a team sports league and analyzes the combined effect of salary restrictions (caps and floors) and revenue sharing. It shows that the effect on club profits, player salaries, and competitive balance crucially depends on the mix of these policy tools. Moreover, the invariance proposition does not hold even under Walrasian‐conjectures if revenue sharing is combined with a salary cap or floor. (JEL L83, C72, L11)     

PROFIT‐MAXIMIZING GATE REVENUE SHARING IN SPORTS LEAGUES

In this article, I examine how sports leagues can use gate revenue sharing to coordinate talent investments and maximize club profits. Gate revenue sharing reduces incentives to invest in talent. Initially lower investments boost profits, because total costs go down, but investing less also shrinks revenues, which harms profits at higher levels of sharing. The league maximizes profits by setting a sharing rule, which balances these two effects. Gate revenue sharing decreases talent investments more strongly in leagues with heterogeneous rather than homogeneous local market sizes. As a result, the profit‐maximizing level of sharing is higher for relatively homogeneous leagues. This implies that more balanced leagues are expected to share more gate revenues than less balanced leagues. It also explains why gate revenue sharing is widely used in the U.S. major leagues, while it is largely absent in European soccer. (JEL L41, L83)     

COMPETITIVE BALANCE MEASURES IN SPORTS LEAGUES: THE EFFECTS OF VARIATION IN SEASON LENGTH

Appropriate measurement of competitive balance is central to the economic analysis of professional sports leagues. We examine the distributional properties of the ratio of standard deviations (RSD) of points percentages, the most widely used measure of competitive balance in the sports economics literature, in comparison with other standard‐deviation‐based measures. Simulation methods are used to evaluate the effects of changes in season length on the distributions of competitive balance measures for different distributions of the strengths of teams in a league. The popular RSD measure performs as expected only in cases of perfect balance; if there is imbalance in team strengths, its distribution is sensitive to changes in season length. It is therefore not recommended for comparisons of competitive balance for different sports leagues with different numbers of teams and/or games played. (JEL L83, D63, C63)     

THE CYCLICALITY OF PRICE‐COST MARGINS IN BANKING: AN EMPIRICAL ANALYSIS OF ITS DETERMINANTS

We study the determinants of the cyclical behavior of banks' price‐cost margins in the United States banking sector, using time series quarterly data for the period 1979–2005. We contribute to the literature by building an empirical model of the countercyclical behavior of these margins first documented by Aliaga‐Díaz and Olivero (2010a) . Doing so we are able to explore potential explanations for this behavior, and to show that margins are consistently countercyclical, even after controlling for the effects of credit risk and monetary policy. As a mechanism for the propagation of aggregate shocks, the countercyclical nature of margins in banking can provide additional support to stabilization policy. (JEL E32, E44, G21)     

THE STATE OF COLLECTIVE RELIGIOSITY IN CANADA: AN EMPIRICAL ANALYSIS

On affirme que la spécialisation institutionnelle qui caractérise l'industrialisation est concomitante du déclin de la présence répandue de la religion. Soutenant de plus que les collectivités sont essentielles à la sustentation idéationnelle, l'auteur explore l'état du judéo-cristianisme dans un Canada s'industrialisant par un examen de la participation à la religion formelle. En se servant d'un cadre démographique de base, et de données de recensement et d'enquêtes, l'auteur commence par un apery général de la participation actuelle et ensuite examine les tendances à l'engagement. On constate que la religion formelle éprouve une baisse de participation que l'on trouve peu probable de s'inverser à l'avenir prévisible. L'auteur termine avec une discussion de la portée des constatations de ce genre pour la religion traditionnelle dans la société canadienne.
It is asserted that the institutional specialization which characterizes industrialization knows the concomitant of a decline in the pervasiveness of religion. Maintaining further that collectivities are essential to ideational sustenance, the author explores the state of Judaic-Christianity in an industrializing Canada through an examination of participation in organized religion. Using a basic demographic framework and census and survey data, he begins with an overview of current participation and then examines involvement trends. It is found that organized religion is experiencing a participation decline which is unlikely to reverse itself in the forseeable future. The author concludes with a discussion of the implications of such findings for traditional religion in Canadian society.     

LEAGUE‐LEVEL ATTENDANCE AND OUTCOME UNCERTAINTY IN U.S. PRO SPORTS LEAGUES

We extend the breakpoint literature regarding annual league‐level attendance and the impact of outcome uncertainty to the National Basketball Association, National Football League, and National Hockey League. As our measures are different than past work on baseball, we also apply our model to the American and National Leagues. Attendance series for each league under consideration are not stationary overall, but are stationary with break points. No form of outcome uncertainty (game, play‐off, or across seasons) matters for attendance in hockey or baseball regardless of which game uncertainty variable is used. Under the measure of game uncertainty that recommends itself for football, only play‐off uncertainty matters for attendance. Whether outcome uncertainty matters for basketball depends on the measure of game uncertainty. Situational similarities in the break points across leagues suggest general areas for future research. (JEL L83, C22)     

AN EMPIRICAL ANALYSIS OF ADOPTION

This paper estimates the supply of adoptions using a decision-making economic framework of desired fertility and family size. The empirical results show that the decision to place a child for adoption is negatively related to a woman's labor force participation, the size of Aid to Families with Dependent Children payments and the unemployment rate, and is positively related to her marital status, education, and religious affiliation. The price and availability of abortions are found to have no statistically significant effect on the adoption decision. Furthermore, state regulations designed to encourage adoptions have no impact on the adoption option.     

AN EMPIRICAL INVESTIGATION OF ASYMMETRIC BEHAVIOR IN CORPORATE DIVIDEND POLICY

Employing three alternative measures of ability to pay, we find support for the Lintner hypothesis that firms pursue a long-run target payout ratio and also that current earnings better explain long-run dividends than cash flows or stock prices. The evidence further indicates that corporations adjust dividends with a ratchet effect, raising them more readily than they lower them. More specifically, when dividends are below target levels, firms move toward equilibrium by increasing them, but when dividends are above target levels, firms approach equilibrium by restricting dividend increases as earnings rise.     

ENVIRONMENTAL JUSTICE IN THE SOUTH: AN ANALYSIS OF THE DETERMINANTS AND CONSEQUENCES OF COMMUNITY INVOLVEMENT IN SUPERFUND

The intent of the present research is twofold. First, this study explores racial and class equity in the remediation of Superfund sites in the South (EPA Region IV) over three time periods related to reform in Superfund. Second, this research expands our conceptualization of procedural equity by assessing the impact of community involvement on site remediation and by exploring factors that predict community involvement. This research explores whether active communities realize greater rewards in terms of more desirable cleanup outcomes and a quicker pace of cleanup and examines who participates in remediation. Findings indicate that higher levels of community involvement can lengthen the remediation process as well as result in some less desirable forms of cleanup. Results also show that sites with a greater percentage of racial and ethnic minorities are less likely to participate in remediation, but the opposite is true for lower income communities. Implications of these findings and suggestions for future research are discussed.     

AN EMPIRICAL ANALYSIS OF OIL PRICE SHOCKS IN THE INTERWAR PERIOD

This paper presents results that indicate that oil price shocks were economically important in explaining movements in industrial production, and, to a lesser degree, movements in wholesale prices in the period between World Wars I and II. The framework for analysis is a vector autoregressive model estimated using monthly data over 1924:2–38:6 that employs a financial intermediation variable, a measure of relative oil prices, and other variables typically found in small macroeconomic models. The impact of oil price shocks is evaluated through computation of variance decompositions and an historical decomposition over the 1929:9–38:6 period.     

A MODEL OF GROWTH AND CONVERGENCE IN THE PRESENCE OF INPUT-ENHANCING FACTORS: AN EMPIRICAL STUDY

We introduce and estimate a growth model involving non-neutral technical change characterized by the presence of input-enhancing factors that vary across countries and serve to offset (and potentially eliminate) diminishing returns to capital. Our empirical results, however, indicate that diminishing returns to capital proves too strong to be overcome by, say, capital-enhancing factors. Consequently, our model predicts a conditional convergence of output per worker across countries, with the speed of convergence being slower than that found in earlier models involving neutral technical change.     

AN EMPIRICAL EXAMINATION OF THE AVERCH-JOHNSON EFFECT

In this paper the Averch-Johnson thesis of a capital bias in regulated firms is examined empirically. This is accomplished by estimating a system of factor demand functions using individual plant data from the electric power industry. Results obtained do not provide support for the A-J effect and it is suggested that there are a number of reasons this could have been expected a priori. finally, the implied parameters of the production function are derived and presented; the values are in line with other estimates of the production function for the electric power industry.     

THE CHALLENGE OF REVENUE SHARING WITH BUNDLED PRICING: AN APPLICATION TO MUSIC

Although bundling can substantially increase profits relative to standalone pricing, particularly for zero‐marginal‐cost information products, it has one major problem: bundling produces revenue that is not readily attributable to particular pieces of intellectual property, creating a revenue division problem. We evaluate several possible solutions using unique song valuation survey data. We find the Shapley value, a well‐motivated theoretical solution, is universally incentive compatible (all bundle elements fare better inside the bundle than under standalone pricing), but revenue‐sharing schemes feasible with readily available consumption data are not. Among feasible schemes, Ginsburgh and Zang's modified Shapley value performs best. (JEL C71, D79, L14)