The Combines Act

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Term Paper Title	The Combines Act
# of Words	714
# of Pages (250 words per page double spaced)	2.86

The Combines Act

The Combines Act

J.C.H. Jones's article "The Economics of the National Hockey League" (1969)
purpose is to explain through simple micro economics that the prime motive of
professional hockey team owners is profit maximization. The owners argue that
their main interest is "for the love of the game," not the financial benefits of
owning a professional sports franchise and to avoid government regulations such
as the Combines Act (note 1).

An article written in 1982 by J.A. Schofield entitled "The Development of First
Class Cricket in England," states the behavior of sport cartels. Three
hypothesises are used to explain the behavior described by Schofield, number two
being developed by J.C.H. Jones (1969). (1) The profit maximization hypothesis.
(2)The joint profit maximization hypothesis that the entire cartel (league)
strives for. This hypothesis does not incorporate non profit objectives that
influence group behavior. (3) The utility maximization model that allow for many
possibilities usually compromising arguments such as the success of the team at
a given year and paid attendance for the team's venue.

By explaining the frame work of a professional sports league Jones introduces us
to factors that make an organized league function, which seems quite familiar to
any other monopolistic markets. Since no team can create any revenue by
themselves they must form a coalition with another club to produce a profit
generating output, namely a hockey game. Other clubs enter this coalition thus
creating a formal league which we call the National Hockey League. Jones then
states how revenue is generated in the N.H.L and how it is affected by certain
factors.

A theoretical model of the N.H.L is created by Jones with all things being equal,
creating an equilibrium amongst all clubs. The model is then adjusted to real
life variables that turns his theoretical model into what we know as the N.H.L.
Jone's variables includes the incentive for teams to win (this being the Stanely
Cup), different quality of players, the amateur draft (a draft at the end of the
season which amateur players a selected, last place team gets first pick and so
forth), and player redistribution(trades).

By applying microtheory Jones clearly presents his argument which I was able to
understand ...

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