publication . Article . 2004

The Control of Externalities in Sports Leagues: An Analysis of Restrictions in the National Hockey League

Dennis W. Carlton; Alan S. Frankel; Elisabeth M. Landes;
Open Access
  • Published: 01 Jan 2004 Journal: Journal of Political Economy, volume 112, pages S268-S288 (issn: 0022-3808, eissn: 1537-534X, Copyright policy)
  • Publisher: University of Chicago Press
Abstract
This paper provides one of the few successful demonstrations of the efficiency of certain types of restrictions in the context of a joint venture. The joint venture we examine is the National Hockey League (NHL) in the 1980s, which was then composed of 21 separately owned teams. (It now has 30 teams.) The restriction we analyze is the NHL rule on franchise relocation. Before one can fully understand the effect of the restriction, one must understand the theory of how sports leagues operate and whether sports leagues have any market power that can be enhanced by such a restriction. After providing such a theory, we empirically test the effect of the NHL restricti...
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