demand for their talents can be limited, however, if a home-grown players rule is
operative. In that case, the big leagues should have their own training facilities before
they can demand foreign talents. The rule, therefore, can make it advantageous for the
small league to have training facilities for their talents. As we will see, however, in the
context of our model, the home-grown condition should be very strong in order for the
positive effect on the small league’s training facility to become operative. Moreover, the
primary beneficiary of a home-grown rule appears to be the big league, especially when
talents are highly capable.
In the next section the basic model will be developed. In section 3 we deal with the case
where talents are exogenously given, while in section 4 talents have to be trained before
they can play in one of the leagues. For both cases we demonstrate the inefficiency of
migration by comparing the market equilibrium with a social-welfare optimum. The fifth
section concludes.
2. The Model
Assume two ‘football leagues’, a large one, in country 1, and a small one in country 2.
The production value of football in country i is given by Yi = NiσαTi (i = 1,2) , where
Ti ≤ 1 represents the number of talented players in the competition, and σ > 1, represent
their capability assumed to be equal across talents. The maximum number of talented
players, supposed to be equal to one, reflects the fixed number of players in a
competition. Talents are supposed to be homogeneous in quality. That means the issue of
deciding how many ‘veterans’ or ‘rookies’ should be in the line up (Tervio, 2006) is no
matter of concern for the owners of the league. The variable Ni can be thought of as the
population in the country of league i (i = 1,2) and indicates the market size of the
football product. Population size is attached as a multiplicative factor to take account of
the public-good characteristics of the product, implying that in larger countries a given
amount of football talent can generate a larger product, and a larger profit as a
consequence, than in a small country.