Monday, October 11, 2010: 9:10 AM
Sports economics textbooks cover theoretical and hypothetical production functions featuring team inputs and wins as output. For example, the leading text by Rodney Fort shows a production function graph with percentage wins on the vertical axis and number of star players on the horizontal axis. The shape shows increasing returns and then diminishing returns to the number of star units. This underlying production function plays a key role in his development of long run cost curves for professional sports teams (the short run assumes a fixed roster).
But there is no empirical evidence testing this production function specification. We will estimate winning functions for professional baseball and basketball, using various measures of star players, and will test the cubic functional form versus the quadratic. The data sets will be panel data for all teams over a period of six years.
Star players will be initially identified as players that have performances that place them in the upper quartile in the league. Other specifications of star players will also be investigated. With this study we will assess the empirical support for a sports winning function that appear in the sports textbooks.