The Impact of Pool Sharing on the Distribution of Playing Talent in the N-Team Leagues

Abstract

This article exactly determines the impact of pool sharing on the talent distribution in the league for a general n–team model where each team is a profit maximizer, each team has the Nash conjectures, each team's revenue depends only on relative team qualities, and the supply of talent is fixed. It is shown that when a pool-sharing agreement is introduced, larger-market teams with greater marginal revenues of winning before sharing will demand more wins and talents than before sharing, while smaller-market teams with smaller marginal revenues of winning before sharing will demand less wins and talents than before sharing.

Keywords

Sports leagues competitive balance pool sharing marginal revenue of winning economic value of a win

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