Migrating Football Players, Transfer Fees and Migration Controls



The small league only decides on its training efforts, e2 , generating, say, T2 (e2) talents.
If
T2(e2) T21 part of the trained talents can be employed in the own league. On the
other hand, if
T2 (e2) T21 not enough talents are raised to satisfy the big league’s
demand. League 1 then has to recalculate its optimal own training efforts, while given the
lower number of talents the small league will have to supply, the small league should re-
optimize as well. The outcome of the latter calculation can result in higher investment in
talents by the small league than in the first-round calculation. However, the big league
will be motivated to reconsider its demand for foreign talents once again, as the supply of
talents in the small league turns out to be larger. This iterative process does not
necessarily lead to equilibrium. In that case, the only feasible equilibrium is where the big
league is like a closed league and the small league only employs mediocre talents.

For some of the specific parameter values that we employed the market equilibrium is
shown in Table 5. In the cases where
α = 0.5 and the transfer rate equals τ= 0.1 , the
above described procedure did not result in a consistent equilibrium. By assumption the
closed-economy annex mediocre talents case arises. The no-talent case for league 2
implies a welfare equal to 195.6.

In all other cases shown in the table some export of talents takes place, or no foreign
talents are demanded at all. In those cases the welfare for league 2 is considerably above
the welfare that would be obtained when league 1 is not able to satisfy its demand for
foreign talents.

Not surprisingly, the market always produces a lower welfare than the corresponding
social optimum in Table 5. More interestingly, in the market equilibrium with positive
transfer fees the small league will employ more talents in their own competition than in
the social optimum. The reason is that the transfer rate in the market has a substitution
effect that makes the demand for foreign talents by league 1 move away from the optimal
amount and makes it instead more advantageous to train their own talents. In the social
optimum the transfer fee system is of a lump-sum nature. As a result, by introducing a
transfer fee system for emigrating players the transfer fee rate that maximizes welfare
W
will generally be lower than the optimal transfer fee rate that maximizes social welfare
W*. This is most clear for α= 0.9 . According to Table 4 the optimal transfer fee rate in

20



More intriguing information

1. Why unwinding preferences is not the same as liberalisation: the case of sugar
2. Strategic monetary policy in a monetary union with non-atomistic wage setters
3. The name is absent
4. Transport system as an element of sustainable economic growth in the tourist region
5. Types of Cost in Inductive Concept Learning
6. An Attempt to 2
7. Research Design, as Independent of Methods
8. Testing Gribat´s Law Across Regions. Evidence from Spain.
9. Migrating Football Players, Transfer Fees and Migration Controls
10. Climate change, mitigation and adaptation: the case of the Murray–Darling Basin in Australia
11. The name is absent
12. PROTECTING CONTRACT GROWERS OF BROILER CHICKEN INDUSTRY
13. Governance Control Mechanisms in Portuguese Agricultural Credit Cooperatives
14. MULTIPLE COMPARISONS WITH THE BEST: BAYESIAN PRECISION MEASURES OF EFFICIENCY RANKINGS
15. Policy Formulation, Implementation and Feedback in EU Merger Control
16. Locke's theory of perception
17. Cross border cooperation –promoter of tourism development
18. An alternative way to model merit good arguments
19. CREDIT SCORING, LOAN PRICING, AND FARM BUSINESS PERFORMANCE
20. Modelling the Effects of Public Support to Small Firms in the UK - Paradise Gained?