Averting a tragedy of the commons: revenue sharing and competitive balance in the NHL

2018 ◽  
Vol 8 (1) ◽  
pp. 35-51 ◽  
Author(s):  
Kenneth M. York ◽  
Cynthia E. Miree
Keyword(s):  
Revenue Sharing ◽  
Tragedy Of The Commons ◽  
Labor Policy ◽  
Collective Bargaining Agreement ◽  
Competitive Balance ◽  
Common Pool Resource ◽  
Effective Management ◽  
Content Type ◽  
Common Pool ◽  
The Commons

Purpose The purpose of this paper is to measure the effect of the National Hockey League (NHL) collective bargaining agreement (CBA) of 2005 between the NHL owners and the NHL Players Association, to determine whether competitive balance in the NHL increased after the CBA. Design/methodology/approach Competitive balance in the NHL was compared between 11 seasons before the NHL Lockout Season in 2004-2005 and 11 seasons after, with a new CBA and a new revenue sharing plan. Competitive balance was measured in multiple ways, within seasons, across multiple seasons, by the margin of victory in individual games, by the concentration of teams winning and playing in the NHL championship, in the correlation of winning percentage of a season with subsequent seasons, and the number of consecutive winning or losing seasons. Findings There was greater competitive balance after the Lockout Season and the new CBA than before on all of the measures of competitive balance. The NHL has found a management solution to the effective management of a common pool resource and avoided a tragedy of the commons. Practical implications While this research builds on previous work which examines the presence of competitive balance in the NHL, it encourages those engaged in labor policy to consider not only the merit of design when negotiating labor policy, but also to explore the impact of policy on organizational outcomes over time. Originality/value This paper combines perspectives and insights from multiple disciplines including economists’ ideas about competitive balance in a sports league, ecologists’ ideas about effective management of a common pool resource, and strategic management ideas about management solutions to a sustainability problem.

The commons problem in the presence of negative externalities

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nahid Masoudi ◽  
Donique Bowie
Keyword(s):  
Empirical Literature ◽  
Theoretic Model ◽  
Negative Externalities ◽  
Content Type ◽  
Common Pool ◽  
Markov Perfect ◽  
Scale Down ◽  
The Commons ◽  
Game Theoretic ◽  
Harvest Decisions

PurposeWhile the commons problem and the issues related to the negative externalities of harvesting have been studied extensively, there remains a need to bridge these two streams of studies to comprehensively investigate the implications of the strategic interactions among resource harvesters in the presence of such negative externalities. This paper aims to fill this gap.Design/methodology/approachThe authors study a common-pool harvest problem when the extractive activities leave behind negative externalities which affect the resource growth rate and reduce the stock beyond the extracted levels. Markov perfect noncooperative and optimal solutions are presented under different scenarios regarding considerations of negative externalities into harvest decisions.FindingsResults of the study suggest that, in the presence of such externalities, all parties must scale down their extraction in accordance with their externalities. The resource can be preserved by implementation of such harvest rule. However, failure to incorporate the externalities exacerbates the commons problem and can even lead to exhaustion of the biomass even if countries manage to cooperate and coordinate their harvest. Suggesting that if such externalities are large enough – which empirical literature suggests they are – then recognition and consideration of these externalities in the harvest decisions is as crucial as cooperation.Originality/valueThis paper provides a framework that is capable of incorporating the negative externalities of harvest activities into a bioeconomic game theoretic model and thereby providing a more real-world representation of the state of the common-pool resource management. While, the authors extend a well-known simple model, the model of this research study has the capacity to explain the widespread incidences of resource collapses. Therefore, the important policy implication is that agents should rigorously work together to understand the extent of the negative externalities of their harvests on the resources.

scholarly journals Adapting Governance Incentives to Avoid Common Pool Resource Underuse: The Case of Swiss Summer Pastures

2018 ◽  
Vol 10 (11) ◽  
pp. 3988 ◽  
Author(s):  
Ivo Baur ◽  
Heinrich H. Nax
Keyword(s):  
Land Use ◽  
European Alps ◽  
Common Pool Resource ◽  
Incentive Structure ◽  
Common Pool ◽  
Land Use Decisions ◽  
The Commons ◽  
Summer Pasture ◽  
Communal Tenure ◽  
Federal Governance

The use of summer pastures in the European Alps provides much evidence against Hardin’s prediction of the tragedy of the commons. For centuries, farmers have kept summer pastures in communal tenure and avoided its overuse with self-designed regulations. During the past decades, however, summer pastures have become less intensely used, which has reduced its agronomic value and the by-production of public goods. However, very little is known about how the various governance incentives affect farmers’ use of summer pasture to result in below-sustainable activity. In this study, we develop an empirically informed game theoretical model of farmers’ land use decisions, which we validate with survey data from a case study in Switzerland. Our results reveal that farmers weigh the benefit of resource use against the costs of maintaining it and that all major sectoral developments, such as increasing livestock endowment, increasing opportunity costs, and decreasing land use intensity on private plots, result in the reduced use of summer pastures. Based on these insights, we suggest adapting the incentive structure at the local and federal governance levels to increase incentives for stocking at the margin. Our study shows how game theory combines with field validation to identify the contextual behavioral drivers in common pool resource dilemmas for informed and improved policy making.

Sharing the Wealth in the "New NHL": The Implications of Revenue Sharing for Competitive Balance, Payroll Spending, and Profits

2006 ◽  
Vol 2 ◽  
Author(s):  
Taylor F Brinkman
Keyword(s):  
Revenue Sharing ◽  
Collective Bargaining Agreement ◽  
Competitive Balance ◽  
Marginal Revenue Product ◽  
Small Market ◽  
Hockey Players ◽  
Response Team ◽  
Negative Effect ◽  
Salary Cap ◽  
Revenue Product

The National Hockey League was in trouble at the end of the 2003-04 season. Not only were teams losing money, but many fans, especially in the non-traditional small-markets, were losing interest. In response, team owners and player representatives collaborated on a new collective bargaining agreement that included a brand new economic system for the League. In addition to instituting a salary cap to help small-market teams remain financially viable, the League sought to improve competitive balance by devising a complex revenue sharing system. After explaining the system in detail, this article identifies how revenue sharing will affect ownership behavior in the hockey players’ labor market, concluding that the system’s large negative effect on the marginal revenue product of small-market teams will render it ineffective at achieving its goal of a higher level of parity.

The 2011-2021 NBA collective bargaining agreement

2016 ◽  
Vol 42 (9) ◽  
pp. 891-901 ◽  
Author(s):  
Thomas R. Sadler ◽  
Shane Sanders
Keyword(s):  
Asymmetric Information ◽  
Collective Bargaining ◽  
Bargaining Game ◽  
Collective Bargaining Agreement ◽  
Competitive Balance ◽  
Indirect Benefit ◽  
Content Type ◽  
Economic Framework ◽  
Opt Out ◽  
Principal Agency Problem

Purpose The purpose of this paper is to analyze the 2011 National Basketball Association (NBA) lockout and collective bargaining agreement (CBA). Design/methodology/approach Using a bargaining game model, the authors show that asymmetric information via owner revenue shifting and financial non-disclosure caused the conflict between owners and players (growth of player salaries) to result in a lockout. Findings The bargaining game also demonstrates the lockout to be a rational response to asymmetric information: by restricting the growth of player salaries, owners improved their competitive position. Other factors motivating the lockout include the indirect benefit to the median owner of repressing player salaries (i.e. greater expected competitive balance) and a principal agency problem within the players’ union. The lockout concluded with a ten-year CBA, a mutual opt-out in 2017, and revenue sharing between 49 and 51 percent of basketball-related income. The league salvaged a shortened 2011-2012 season, but created an economic framework more favorable to owners. Originality/value This paper is novel in its analysis of the bargaining aspects of the current NBA collective bargaining agreement.

scholarly journals Can the Tragedy of the Commons be Avoided in Common-Pool Forage Resource Systems? An Application to Small-Holder Herding in the Semi-Arid Grazing Lands of Nigeria

2020 ◽  
Vol 12 (15) ◽  
pp. 5947
Author(s):  
Rhoda F. Aderinto ◽  
J. Alfonso Ortega-S. ◽  
Ambrose O. Anoruo ◽  
Richard Machen ◽  
Benjamin L. Turner
Keyword(s):  
Political Stability ◽  
Tragedy Of The Commons ◽  
Long Term Effects ◽  
Labor Costs ◽  
Common Pool ◽  
Market Expansion ◽  
The Commons ◽  
Grazing Lands ◽  
The Impact ◽  
Resource Systems

There exist common-pool resource systems where it is difficult to prevent prospective beneficiaries from receiving profits from the use or harvest of shared resources, and they are often subject to continual utilization, leading to resource degradation and economic erosion (a behavior known as the ‘tragedy of the commons’). Nigerian nomadic grazing systems currently undergoing the tragedy of the commons pose a great challenge to agrarian communities, herders and political stability throughout the country due to violent conflicts and property destruction as herders migrate in search of forage resources for livestock. We modeled these dynamics in order to better understand the Nigerian grazing lands, with the objective of identifying potential leverage points capable of reversing overgrazing-induced forage degradation, in order to ensure a sustainable livestock production sector. Model what-if experiments (crop restrictions, crop marketing and increased labor costs) were run, resulting in partial solutions that were effective only in the short-term or limited in geographic-scope. A sustainable solution should include a combination of strategies, as the impact of one strategy alone cannot effectively resolve these Nigerian grazing issues (e.g., collaboration between farmers, herdsmen and government stakeholders to increase market integration via crop market expansion while simultaneously providing forage regeneration time for grazing lands). The resulting model could be used by Nigerian policy-makers to evaluate the long-term effects of decisions which were previously unexplored.

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