Market Competition and Threshold Efficiency in the Sports Industry

초록

Previous studies of competitive balance (CB) have analyzed the variations in game outcomes that is the second moment of winning percentage. This article differs in two aspects. First, it analyzes market competition with respect to efficiency. Second, it analyzes efficiency distribution (in particular, the third moment of the efficiency distribution and the efficiency bound). It also suggests the efficiency bound as a new measure of market competition. By applying stochastic frontier models to a panel data set of the European football leagues (English Premier League, Spanish La Liga, Italian Serie A, and German Bundesliga), it derives important implications. First, the minimum efficiency estimates seem to reveal information relevant to market competition and additional information from the conventional CB measure. Second, differences in the shapes of the efficiency distribution curves across the four leagues imply that the four leagues faced different environments in terms of market competition.

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