The Short Supply of Tall People: Competitive Imbalance and the National Basketball Association

In recent years a wealth of literature has been offered examining the economics of professional team sports. Much of this work follows in the neoclassical tradition, employing the standard assumptions and focusing primarily on the impact of individual decision making. The purpose of this work is to show that the blinders imposed by the narrow focus of the neoclassical tradition on the issue of competitive imbalance may alter the conclusions that a broader view suggests. Economists from the time of Adam Smith have trumpeted the virtues of competition. From the perspective of individual firms, though, profits are typically increased when competition is eliminated. However, in professional sports, the elimination of competition effectively removes the primary source of revenue. In the words of Walter Neale, “Pure monopoly is a disaster. Former heavy-weight champion Joe Louis would have had no one to fight and therefore no income ” (1964, 2). The analysis of Neale extends beyond the obvious case of the boxing champion to any professional sport. As noted by Mohamed El-Hodiri and James Quirk (1971, 1306),