Abstract
Testing for the presence of unsustainable runs is difficult because the model of Chaps. 4 and 5 does not explicitly detail the process by which a club owner moves from one equilibrium to another, if more than one equilibrium exists. This is an unfortunate shortcoming of models that generate multiple equilibria
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- 1.
Gurkaynak (2008) concludes that the existing tests for speculative bubbles in asset prices are inconclusive and cannot distinguish between a bubble and a regime switch in the fundamental process determining the asset price.
- 2.
Found at http://www.bea.gov/regional/index.htm.
- 3.
Found at http://www.bls.gov/lau/.
- 4.
Found at http://www.bls.gov/data/#prices.
- 5.
Found at https://umich.box.com/s/41707f0b2619c0107b8b/1/320022665. These are data accumulated from Team Marketing Reports for various years (http://www.teammarketing.com).
- 6.
- 7.
Statistics Canada typically uses a much smaller capture area for its local metropolitan population and income data than does the Bureau of Economic Analysis.
- 8.
The dependent variable wp is bounded to fall between zero and one. We also estimated (6.1) using a logit probability model but found no significant improvement over the least squares regression results. This is probably because the sample values for wp mostly fall in the range 0.35–0.65 so that a linear probability model is a good approximation.
- 9.
Using metropolitan area population as a measure of market size does not change the results.
- 10.
The rejection values are F0.05, 5, 214 = 2.2561 and F0.05, 5, 207 = 2.2577 for the National and American League, respectively.
- 11.
The Oakland Athletics of just a few years ago are a good example of a club with a relatively low payroll that experienced success, although that success was short-lived.
- 12.
Jacques–Bera test statistics were computed to test for the normality of the estimated residuals. In no case was the null hypothesis of normal residuals rejected at 95% confidence.
- 13.
Krautmann (1999) developed a simpler, more direct approach that required less data and utilized only one regression equation. This method has become the method of choice over the last few years [Krautmann and Ciecka (2009), Brown and Jepsen (2009) to name a few]; however, it does not provide an estimate of a player’s MRP, rather it is a method to predict a player’s salary assuming that the MRP rule holds. As such it estimates a wage equation, not a MRP equation, so searching for nonlinear behavior here is not appropriate.
- 14.
These revenue data are not without their limitations. See Zimbalist (2010) for an in-depth analysis of salary and revenue data.
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Rockerbie, D.W., Easton, S.T. (2014). Some Empirical Testing. In: The Run to the Pennant. Sports Economics, Management and Policy, vol 5. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-7885-0_6
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