The effects of institutional change in European soccer
Haan,M.A. Koning,R.H. van Witteloostuijn,A.
Haan,M.A.
Koning,R.H.
van Witteloostuijn,A.
Abstract
The last decades have seen two profound changes in European soccer. First, international trade in talent has increased markedly. Second, international competitions such as the Champions League have become much more important. Using a theoretical model, we study how these changes affect competitive balance within national competitions, and quality differences between national competitions. Introducing international trade in talent leads to a flow to large countries, as the returns to talent are higher there. Wages increase in small countries, but decrease in large ones. The wage increase in small countries hurts small teams more than large ones. Therefore, competitive balance decreases. The wage decrease in large countries benefits small teams more, so competitive balance increases. The introduction of a Champions League implies the possibility to win a large amount of prize money. This is relatively more important for small teams. Hence, competitive balance increases in all countries, and talent flows from large to small countries, provided international trade is possible. Wages increase. When looking at both changes combined, we find that talent flows from small to large countries. Hence, in this sense, the trade effect dominates the Champions League effect. Competitive balance increases in all but the very smallest countries.
Description
Date
2012
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
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Journal Issue
Keywords
SDG 10 - Reduced Inequalities
Citation
Haan, M A, Koning, R H & van Witteloostuijn, A 2012, 'The effects of institutional change in European soccer', Journal of Economics and Statistics, vol. 232, no. 3, pp. 318-335.
License
info:eu-repo/semantics/restrictedAccess