Document Type
Working Paper
Publication Date
9-11-2014
College/Unit
Chambers College of Business and Economics
Document Number
14-29
Department/Program/Center
Economics
Abstract
We develop and empirically test a model of intercollegiate athletic department expenditure decisions. The model extends general dynamic models of nonprice competition and includes the idea that nonprofit athletic departments may simply set expenditure equal to revenues. Own and rival prestige is included in the athletic departments' utility function, generating rivalrous interaction. The model predicts that current own and rival investment has multiperiod effects on prestige since investment is durable. We test the model using data from NCAA Division I athletic programs from 2006-2011; the models incorporate spatial autocorrelation that capture dynamic rivalrous interaction. Results support the prediction of both models - NCAA Division I athletic programs appear to engage in dynamic non-price competition in terms of expenditure and spend all revenues generated.
Digital Commons Citation
Hoffer, Adam; Humphreys, Brad R.; Lacombe, Donald J.; and Ruseki, Jane E., "The NCAA Athletics Arms Race: Theory and Evidence" (2014). Economics Faculty Working Papers Series. 122.
https://researchrepository.wvu.edu/econ_working-papers/122