uncompensated migration of talents as the Bosman ruling intended to imply. If the home-
grown rule is compared to a system of optimal transfer fees, however, the home-grown
rule fares less well: especially when both leagues should have approximately the same
number of talents and migration should be low as a result, the home-grown rule leads to
too many talents in the big league and a too high level of mobility of talents.
Finally, notice that in some of the analyzed cases it appeared to be optimal that the small
league trained talents, but did not employ them. In that case monetary transfers from the
big league to the small league had to occur to compensate the small league for the loss of
talents. Let us point out, however, that our analysis is based, first, on the assumption that
transfer money provides the same utility as the money talents produce by playing in their
own country. Second, if the federal football authority was using another social welfare
function that gave more weight to the small leagues’ welfare, like a Rawlsian function,
the welfare loss of losing talents by the small league would be more important, and thus
could lead to the result that talents should always play in the small league.
References
Boadway, R (2004)., The Theory and Practice of Equalization, CESifo Economic Studies, vol. 50, pp.211-
254.
Boadway R. and F. Flatters (1982), Efficiency and equalization payments in a federal system of
government: a synthesis and extension of recent results, Canadian Journal of Economics, vol. 40,
pp.613-633.
El-Hodiri, M. and J. Quirk (1971), An economic model of a professional sports league, Journal of Political
Economy, vol. 98 (6), pp. 1307-1324.
European Parliament (2007), The future of professional football in Europe, Resolution of 29 March 2007,
2006/2130(INI).
Fees, W. and G. Muehlheusser (2003a), The impact of transfer fees on professional sports: an analysis of
the new transfer system for European football, Scandinavian Journal of Economics, vol 105, 139-
154.
Fees, W. and G. Muehlheusser (2003), Transfer fee regulation in European football, European Economic
Review, vol 47, 645-668.
Palomino, F. and J. Sakovics (2004), Inter-league competition for talent vs. competitive balance,
International Journal of Industrial Organization, vol. 22, 783-797.
Szymanski, S., (2003): “The economic design of sporting contests”, The Journal of Economic Literature,
vol. 41, 1137-1187.
Szymanski, S. and S. Késenne (2004), Competitive balance and gate revenue sharing in team sports,
Journal of Industrial Economics, vol. 52, pp. 165-177.
Tervio, M. (2006), Transfer fee regulation and player development, Journal of the European Economics
Association, vol. 4, 957-987.
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