What is a Zero-sum game?
Industry output is constant (there is only one champion)
What are the 3 levels to a Zero-sum game?
if output is the game itself: one winner one loser (difference in beer production for example. if one produces more, the other one can also produce more)
if output is the champions title: one winner several losers (In boxing many different champion in organisations)
if output is the number of games played in a tournament: can increase number of teams in league 18/20, can increase number of tennis players allowed to play us open, increase teams for 2026 world cup by 16 teams good thing or not? does it increase output
1. criticism: create many bad/unbalanced matches, boring
2. criticism: ruin the qualification, in the past it was interesting
Given technology
The exploitation of productivity potentials is limited because the production process is determined by the rules of the game
-> Team can‘t add 2 players to increase chances of winning
Team production
Competitors in any league or championship depend on each other to produce output (i.e., games and championships)
-> No single player or team can produce output on its own
Inverted joint production
process - output
process /
What is the Louis-Schmeling-Paradox?
A single dominant contestant is a disaster as output quality (and revenue potential) increases with the quality of the competitors
-> In normal industry, weaker competitors are better -> monopoly ans price setting -> Not in sports industry, People want to see a tough fight
—> Extremely important in US where there is no relegation, fighting for spots in european championships etc. Competitive balance less important in europe
Natural monopolies
single dominant league or championship will produce superior output at lower costs than two or more rival leagues or championships
-> Cost to serve an additional customer is 0, Fixed cost degression
In sports, some exceptions from antitrust law apply
-> One exception in boxing: Football club has unlimited potential to compete, Fighter is limited to 40 fights usually. Trade-Off: select boxers of lower ability and do many fights or pick better oponents but have fewer fights. Top boxers prolong the career by avoiding distracting fights against each other
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