Migrating Football Players, Transfer Fees and Migration Controls



where Ti represents the exogenous part of talent availability and ei1 indicates the
investment in home talent. An investment equal to
ei1 involves costs equal to
c(ei - 1). For simplicity we assume that training only determines the number of talents,
but their capability remains exogenously given.

Below, we first derive how the social welfare optimum looks like in a closed and an open
economy, respectively. Then we compare the market equilibrium, respectively, without
and with a transfer fee system, to the social-welfare optimum. Finally, we consider
whether a home-grown rule is better able to approach the social-welfare optimum than a
transfer fee system.

4.1 Optimal allocation

Given this set up, we first consider the case where the FFI is able to determine the
command optimum. It sets the optimal amount of training by the leagues, determines the
optimal allocation of players to the two leagues, and decides how the revenues from the
football product and the costs of the training facilities are shared between the leagues. So,
the FFI sets
Ti* and ei* under the restriction T1* + T2* = T1 + T2 . Moreover, product
revenue and training cost sharing is implicitly given shape in the form of a redistributive
scheme between the leagues. This scheme contains a transfer
Γ , which can be positive or
negative, from the big league to the small league. The FFI maximizes the following
social welfare function:

W =N1log(Y1(1-αT1)-c(e1 -1))+N2 log(Y2(1-αT2) -c(e2 -1))(8)

The first-order conditions read:

1 =∏2

(9)


N1  N 2

e1* = e*2                                                                        (10)

Y1((1-αT1*)logσ-1)Y2((1-αT2*)logσ-1)                            (11)

14



More intriguing information

1. The name is absent
2. Federal Tax-Transfer Policy and Intergovernmental Pre-Commitment
3. The Impact of Minimum Wages on Wage Inequality and Employment in the Formal and Informal Sector in Costa Rica
4. An Interview with Thomas J. Sargent
5. Getting the practical teaching element right: A guide for literacy, numeracy and ESOL teacher educators
6. The name is absent
7. Passing the burden: corporate tax incidence in open economies
8. Ongoing Emergence: A Core Concept in Epigenetic Robotics
9. The bank lending channel of monetary policy: identification and estimation using Portuguese micro bank data
10. The name is absent
11. Happiness in Eastern Europe
12. Initial Public Offerings and Venture Capital in Germany
13. Importing Feminist Criticism
14. A Regional Core, Adjacent, Periphery Model for National Economic Geography Analysis
15. The name is absent
16. Modeling industrial location decisions in U.S. counties
17. The name is absent
18. The name is absent
19. Qualification-Mismatch and Long-Term Unemployment in a Growth-Matching Model
20. Artificial neural networks as models of stimulus control*