Thursday, June 2, 2005
...not so much from the activity but the business form.
Professor Stephen Ross of the University of Illinois School of Law and Professor Stefan Szymanski of the Department of Economics in Imperial College, London, have recently published a paper in the University of Illinois Law and Economics Working Paper Series entitled Antitrust and Inefficient Joint Ventures: Why Sports Leagues Should Look More Like McDonald's and Less Like the United Nations. Their thesis is that joint ventures, such as sports leagues, may be more efficient and responsive to consumer needs if there was more integration of organizational form. Specifically, they suggest that a league like the NFL should set up in a corporate form with the corporation making unilateral, and independent, decisions on management, much like the organization of NASCAR or McDonald's franchises. The inefficiency of the current organization form for joint ventures stems from transaction costs in group decision making. The authors "argue that courts could view the current structure as an unlawful refusal of club owners to participate in a sporting competition that they themselves cannot control, which we argue unreasonably restrain trades and unlawfully maintains monopoly power."