<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Based on previous research it can be stated that modelling sport economics related demand curves (e.g. demand for sport events and athletes) is different from other types of modelling. The difference lies in the fact that some parts of the demand curves are nearly horizontal in case of sport goods and nearly vertical in case of athletes, because the price of sport events is inflexible and at the same time, salaries of top athletes are extremely flexible. This study investigates parameter estimation methods appropriate for the relevant demand functions of sport economics. In this cases the generally used ordinary least squares estimator is less robust, so the weighted least squares estimators are able to handle heteroskedasticity. If the distribution of the variables is known, the Newey-West heteroscedasticity corrected estimates give even stronger results. The empirical study analyses footballer transfer fees in top European leagues and identifies a threshold at which the traditional supply-demand functions are not appropriate. According to the results, word class athletes, in a way, can be considered prestige goods for which demand may be irrational.</p></abstract>

Based on previous research it can be stated that modelling sport economics related demand curves (e.g. demand for sport events and athletes) is different from other types of modelling. The difference lies in the fact that some parts of the demand curves are nearly horizontal in case of sport goods and nearly vertical in case of athletes, because the price of sport events is inflexible and at the same time, salaries of top athletes are extremely flexible. This study investigates parameter estimation methods appropriate for the relevant demand functions of sport economics. In this cases the generally used ordinary least squares estimator is less robust, so the weighted least squares estimators are able to handle heteroskedasticity. If the distribution of the variables is known, the Newey-West heteroscedasticity corrected estimates give even stronger results. The empirical study analyses footballer transfer fees in top European leagues and identifies a threshold at which the traditional supply-demand functions are not appropriate. According to the results, word class athletes, in a way, can be considered prestige goods for which demand may be irrational.

Handling heteroskedasticity in labour demand functions of athletes

Department of Economics and Econometrics, Faculty of Business and Economics

Croatian Review of Economic, Business and Social Statistics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Handling heteroskedasticity in labour demand functions of athletes"}

Based on previous research it can be stated that modelling sport economics related demand curves (e.g. demand for sport events and athletes) is different from...

Handling heteroskedasticity in labour demand functions of athletes

Published Online: Dec 14, 2018

Page range: 47 - 56

Received: May 25, 2018

Accepted: Oct 31, 2018

DOI: https://doi.org/10.2478/crebss-2018-0012

Keywords
demand curves, football market transfers, robust estimation methods, sports economy

© 2018 Gábor Rappai et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Handling heteroskedasticity in labour demand functions of athletes

Published Online: Dec 14, 2018

Page range: 47 - 56

Received: May 25, 2018

Accepted: Oct 31, 2018

DOI: https://doi.org/10.2478/crebss-2018-0012

Keywordsdemand curves, football market transfers, robust estimation methods, sports economy

© 2018 Gábor Rappai et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
demand curves, football market transfers, robust estimation methods, sports economy