Project 1, Sports Economics, Wednesdays, Fall 2023
Name and student ID number: 黃柏宸 E14092021
The subject of the project: Competitive imbalance, reserve clause, draft, and revenue sharing (Topic 2)
a. From this topic, what methods of economic analysis (including economic principles, theories, and
explanations) did you learn from the lecture, classroom game, and discussion in the class? Briefly
explain these methods and the process through which you learned these methods.
The theory I would like to elaborate on is revenue sharing. Revenue sharing is a financial arrangement
in which multiple entities, typically businesses or partners, share the income generated by a specific
business or project. This arrangement allows for the distribution of risks and rewards among partners,
fostering mutual interests. In the realm of sports, for instance, leagues may implement revenue-sharing
systems to ensure that all teams can benefit from the league's success, not just a select few. This helps
maintain balance and competitiveness across the entire league.
The background of this discussion is the so-called competitive imbalance, which refers to a significant
disparity or inequality among participants in a particular industry or field. This can stem from certain
companies or individuals having more resources, technology, market share, or other competitive
advantages. An example discussed in class is the competitive imbalance caused by the recruitment of
star players by teams from larger cities. Factors such as market size and resources often enable larger
city teams to offer higher salaries, better facilities, and broader brand exposure, leading to a
recruitment advantage.
The outcomes of games also indicate that larger city teams can recruit star players more successfully,
creating a "competitive imbalance on the field" as a form of "market equilibrium." This connects to the
supply and demand theory discussed in the first class. Solutions presented in class include draft systems
and retention clauses, which restrict player mobility, preventing bidding wars for star players and
maintaining a balance in competition.
Another solution discussed is ticket revenue sharing to address the wealth disparity issue in
competitive imbalance. In the context of revenue sharing, it highlights the unequal distribution of
resources, market share, and competitive advantages among participants in a particular industry or
field. The issues mentioned can be linked to the problem of competitive gap or inequality. Competitive
imbalance is a theoretical concept mainly used to describe a significant competition gap or inequality
among participants in a market, industry, or specific field. This imbalance may result from various
factors, including uneven resource allocation, technological levels, and market share, giving some
participants a greater competitive advantage while leaving others at a relative disadvantage.
The core perspectives of the theory include the following aspects:
Unequal Resources: One major reason is the uneven distribution of resources among participants.
Some companies may have more financial resources, technological innovation, market share, or other
competitive advantages, placing them in a more favorable position in the market.
Technological Advantages: Inequality in technological levels may also lead to competitive imbalance.
Companies with advanced technology may find it easier to innovate and offer more competitive
products or services, thereby dominating the market.
Market Share: Some companies may already have a larger market share, giving them greater influence
and control in the market. This superior position may make it difficult for other participants to enter the
market or gain a significant market share.
Unfair Competition: Competitive imbalance may be influenced by unfair competitive practices such as
monopolies, price agreements, market share divisions, etc. These practices can lead to abnormal
phenomena in the market, hindering normal market competition.
Methods to address competitive imbalance may include government regulation and intervention,
implementing antitrust regulations, promoting fair competition, and enhancing the competitiveness of
participants. The existence of competitive imbalance may have negative effects on market efficiency
and fairness, necessitating measures to maintain a normal market competition order.
Another topic I'd like to discuss is collusion, which refers to two or more independent companies or
oligopolies joining forces to jointly control the market, coordinate behavior, and set prices together. In
this situation, participants have a cooperative relationship to pursue common economic interests.
Collusion typically manifests as price coordination in the market, reduced supply, and cooperation
among participants to ensure mutual profit maximization. The main objectives include:
Market Share Allocation: Participants may negotiate and allocate market shares to ensure that each
participant has a certain share in the market. This helps avoid excessive competition and ensures that
each company maintains a stable market share.
Joint Action: Participants may achieve common goals through joint actions, such as joint investments in
research and development, sharing technology, or engaging in joint marketing. This helps improve
efficiency, reduce costs, and increase advantages in external competition.
b. Use examples to explain where and how these methods can be applied to other issues in your daily
life.
revenue sharing:Shared Kitchen with Roommates:
Imagine you and your roommates are jointly responsible for maintaining a shared space, such as a
communal kitchen. Each roommate has their own dietary habits and schedules, but some may use the
kitchen more frequently, leading to an imbalance in cleanliness and resource usage. This creates a form
of "competitive imbalance," where some roommates may feel they invest more time and effort, while
others benefit without shouldering corresponding responsibilities. To address this, consider
implementing a system similar to income sharing. This could involve establishing regular cleaning and
organizing schedules for each roommate and evenly distributing the rewards for these tasks among all
roommates. This helps ensure everyone participates and shares the responsibility of maintaining the
shared space. Additionally, discuss rules such as taking turns using shared resources or ensuring equal
access to kitchen equipment.
Unequal Participation in an Academic Team:
Picture a scenario where members of an academic team collaborate on a research project. However,
some members may have more time and professional expertise, while others may be busier with other
commitments. This potential "competitive imbalance" could lead to some members feeling they
contribute more effort, while others may not have the same level of engagement. To address this issue,
consider implementing a system similar to income sharing. Assess each member's level of participation
and contributions, then evenly distribute the outcomes of the research project based on these factors.
This helps ensure that everyone receives corresponding rewards from the research project.
Simultaneously, discuss rules such as ensuring each member has the opportunity to participate in key
decision-making processes or taking turns leading the project.
Planning a Joint Trip with Friends:
Envision planning a shared trip with friends, each with their own travel style and budget preferences.
Some friends may lean towards luxurious accommodations and restaurants, while others prefer budgetfriendly options. This situation could lead to "competitive imbalance," where some friends may feel the
amount spent on the travel plan is not evenly distributed, causing others to feel they are paying too much.
To resolve this, consider implementing a system similar to income sharing. Each person contributes a
portion of the budget, and then evenly distribute the total budget among everyone. This ensures that
each person actively participates in the travel plan and contributes a relatively equal amount. Additionally,
establish rules such as providing each person with the opportunity to suggest travel activities or taking
Schools may exhibit unequal distribution of educational resources, including classroom facilities, teaching
materials, and laboratory equipment. Some schools may have more resources, providing a superior
learning environment, while others may face shortages. This inequality can affect students' learning
opportunities and development, placing some students at a disadvantage in competition.
Diverse Family Backgrounds:
Students come from different family backgrounds, leading to potential inequalities in school competition.
Some students may have richer family resources and better educational backgrounds, giving them
academic advantages. Conversely, students from economically challenged or resource-limited families
may face greater competition pressure, needing to overcome additional obstacles.
Inequality for Students with Special Educational Needs:
Schools host a group of students with special educational needs, such as learning disabilities, attention
deficit hyperactivity disorder (ADHD), or autism. These students may require additional support and
resources, but sometimes face competitive inequality due to a lack of appropriate support. Differences
in providing special education resources in schools can impact these students' academic and social
performance.
Students with Different Language Backgrounds:
Schools may have students from diverse language backgrounds, and their native language may not be
the language of instruction. These students may face language barriers, influencing their academic
achievements. During language-related tests, assessments, or competitive subjects, these students may
experience inequality, requiring extra support and resources to overcome language barriers.
These inequalities can have profound effects on students' academic performance and future
development. Therefore, schools and society need to take measures to ensure the fair distribution of
educational resources and provide support and opportunities to facilitate equal participation and
development for all students.
Gender Inequality in the Workplace:
Gender Pay Gap:
Men and women in the same position may experience a gender pay gap. This gap is partially attributed
to factors such as gender discrimination, unequal career choices, and disparities in promotion
opportunities. Women may be undervalued or perceived as less competent than men, impacting their
salary levels.
turns being the leader of the plan to ensure a fair and inclusive trip.
In schools, unequal competition may arise in various aspects:
Unequal Distribution of Educational Resources: