Revenue sharing and competitive balance when teams are not wage takers - INRAE - Institut national de recherche pour l’agriculture, l’alimentation et l’environnement
Article Dans Une Revue Review of Industrial Organization Année : 2009

Revenue sharing and competitive balance when teams are not wage takers

Résumé

Recent papers have enriched the conventional modeling of teams’ behavior through a game theoretic background at the competition level (introducing a contest success function). We take a step forward and consider contest on the talent market as well. Each team takes into account the fact that the price to be paid recruiting talent is a function that depends on both its own demand and the demands from the rival teams. For the two-team model, we show that the removal of the assumption that teams are price takers implies that the invariance proposition only survives if the price-function for talent is linear increasing. The extension to the n-team model shows that this result no longer holds; in fact, revenue sharing improves the competitive balance. More generally, an improvement in competitive balance is the most likely if one rules out the possibility of a very convex price-function. In addition revenue sharing can reduce the economic inefficiency of teams’ behavior, and so profits may increase.

Dates et versions

hal-02657764 , version 1 (30-05-2020)

Identifiants

Citer

Michel Cavagnac. Revenue sharing and competitive balance when teams are not wage takers. Review of Industrial Organization, 2009, 35 (3), pp.299-313. ⟨10.1007/s11151-009-9230-3⟩. ⟨hal-02657764⟩
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