The nonlinear behavior of competition: the impact of talent compression on competition |
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Authors: | Martin B Schmidt |
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Institution: | (1) Department of Economics, College of William and Mary, P.O. Box 8795, Williamsburg, VA 23187-8795, USA |
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Abstract: | The competitiveness of a firm is intimately related to the productivity of its components. The distribution of profits should
then be highly correlated with the distribution of productivity—the more equal distribution of productivity the more equal
distribution of rents. To assess this argument, the present paper examines the time series behavior of competition within
Major League Baseball. The above logic would suggest that the reason for the improvement in the competitive balance in MLB
is a more equal distribution of playing talent. In the end, the improvement appears to be driven by increased player homogeneity
rather than institutional changes.
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Keywords: | Competitive balance Nonlinear Co-trending |
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