The evolution of sports rules

Gibbous, a loyal guy, asks:

The evolution of the rules of sports as a standards-setting process – – are the rules of basketball (or baseball, golf, football…) optimal in the same way that (arguably, at least) the QWERTY keyboard is?

I would put QWERTY aside, as that is a non-proprietary standard.  With a proprietary standard, I see a few reasons why the evolution of sports rules may be less than ideal. 

1. The rules may be geared toward the sale of merchandise, which implies an appeal to the young and to the least common denominator.  This is mostly an aesthetic objection, although you can tell a story about the purist being a neglected infra-marginal consumer.

2. The rules of the sport may be geared toward television advertising revenue, with the above argument repeated.

3. The league has market power and at some margin it will produce too few franchises; think of the league as selling franchise rights for money.  Some of this output restriction is quality control but some of it sheer monopolization.  (Allowing more franchises, at some margin, will loosen the meaning of the rules and conventions.  Imagine if way back when they had let NBA teams play the Harlem Globetrotters every now and then.  In what year would the fifth-best NBA team start beating them?)

4. If the league restricts the number of teams, other distortions will result, such as when the city of Memphis overbids for the right to have an NBA team.  Furthermore franchises will end up too far apart in geographic terms; bids are determined by producer surplus but societal welfare depends on consumer surplus too.

5. Sports leagues lead to less than optimal levels of player mobility; think monopsony power and the desire to redistribute rents to team owners.  Remember Curt Flood?

6. It is a good industrial organization question whether sports leagues will produce too many or too few games in a season, relative to a social optimum.  Figure it out!  I have an answer in mind but I'm not letting on about it.


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