Camilla Mastromarco ; Marco Runkel : Rule Changes and Competitive Balance in Formula
نویسندگان
چکیده
This paper provides an economic explanation of the frequent rule changes in the Formula One (F1) motor racing series. In a two-stage model, the FIA (as the organizer of the F1) rst decides whether to change the rules or not, and then the racing teams compete in a contest. It turns out that a rule change reduces the teams' performances, but also improves competitive balance between the teams. The rule change is implemented, if the FIA's revenue gain from the latter e ect overcompensates the FIA's revenue loss from the former e ect. We provide empirical evidence from F1 seasons in the period 1950-2003 which supports the main implications of the model. JEL classi cation: D43, L83 key words: Formula One, Competitive Balance, Contest aThe present study was carried out while Camilla Mastromarco was Marie Curie Research Fellow at the Department of Economics, University of Munich. We thank Ulrich Woitek for several comments which considerably improved the paper. We also appreciate the helpful suggestions of seminar participants at the University of Leece and at the University of Munich. All errors remain our own. bCamilla Mastromarco, Department of Economics and Quantitative Methods, University of Leece, Ecotekne, via per Monteroni, 73100 Leece, Italy, email: [email protected] cMarco Runkel, Department of Economics, University of Munich, Ludwigstr. 28/Vgb./III, 80539 Munich, Germany, email: [email protected] (corresponding author)
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