ECN 722 Chapter Notes - Chapter 4: Coase Theorem, Profit Maximization, Standard Deviation
14 Mar 2019
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Document Summary
Chapter five - ensuring competition in an uncompetitive field. Reserve clause - a policy that allowed teams to retain the right to a player even when that player was not explicitly under contract. Louis-schmeling paradox - in sports, the stronger the competitive, the greater interest of a paying customer. Competitive balance - the distribution of wins in a league so it is consistent with profit maximization across the league. Invariance principle - the distribution of talent in sports leagues moves to its highest-valued use regardless of who receives the revenue generated by the players. Coase theorem - when there are zero transaction costs, the application of legal rights has no effect upon the allocation of resources among economic enterprises. Idealized standard deviation - the ration of the mean winning percentage in the league to the square root of a league"s schedule length; illustrates the importance of schedule length.
