Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104150
Authors: 
Mastromarco, Camilla
Runkel, Marco
Year of Publication: 
2004
Series/Report no.: 
Munich Discussion Paper 2004-16
Abstract: 
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) first 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 effect overcompensates the FIA's revenue loss from the former effect. We provide empirical evidence from F1 seasons in the period 1950-2003 which supports the main implications of the model.
Subjects: 
Formula One
Competitive Balance
Contest
JEL: 
D43
L83
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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