Talk:Economics Lecture Seven

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I mean, I know this is meant to be a thought-provoking question, but in essence it's inaccurate. CreationWiki, Theopedia, OrthodoxWiki, Citizendium, etc. --Hojimachongtalk 19:18, 31 March 2007 (EDT)

Example of Perfect Competition: Sports

I disagree with the analysis.

  1. You wrote "Goods that are perfect substitutes? Yes (entertainment services in this case). It's easy to stop rooting for the New York Giants and start rooting for another team, such as the New York Jets, or at least it should be easy!" The quality of the game depends on the quality of the teams playing, as well as other implications the game may have (rivalry, playoff contention, etc.). Hence, that's one factor why some games are more-watched on TV than others. Further, as a nominal Chicago Bears fan in Eagles/Giants/Jets territory, fandom and attention are not interchangeable. I think ESPN's ombudsman wrote that they cover large market teams (New York, Chicago, LA) because they have the most fans and make the most money, which is something we would not expect from a perfectly competitive market. Additionally, transaction costs associated with travel mean that tickets to various games are not interchangeable; having a ticket to a game that is only a train ride away is much more useful than a ticket to a game 2000 miles away.
  2. You wrote "Perfect knowledge in the market? Yes, everyone knows the scores and the ticket prices are published for anyone who is interested." Treating the scores as a factor in the market undercuts your previous statement that all NFL games are perfect substitutes. Also, you implicitly assume that there is one ticket price; there are many tiers of tickets (all of which are way too expensive, in my opinion).
  3. "Perfect mobility of resources? Pretty much "yes" again, as each team has tryouts and participates in a massive draft of college players every year." Not really; the supply of NFL-caliber football players is rather small, and many of them are bound by contracts and other league rules (such as the franchise player tag). Additionally, the salary cap hinders teams from spending money to acquire profitable players.

Sports economics is a fascinating subject (and one I wish I could study), but I think this example is confusing to high school economics students and should be removed. GregG 10:05, 11 April 2013 (EDT)

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