SELECTIVE ESSAYS IN COMPETITIVE ENVIRONMENTS Marco Piatti BBus(Ec) Primary Supervisor: Professor Benno Torgler Submitted in fulfilment of the requirements for the degree of Master of Business (Research) School of Economics and Finance Faculty of Business Queensland University of Technology Submitted February, 2012 i Keywords American Economic Review, (Australian) Rugby League, Competition, Corruption, Extraordinary Wealth, Gini Coefficients, Globalisation, Impact of Team Colours, Inequality, Rankings, Red, Superrich, Superstars, Team Sports, William Baumol, Winner Take All Markets. Selective Essays in Competitive Environments i ii Abstract This thesis is a collection of essays that utilises descriptive and empirical tools to examine competitive environments such as in academia, superrich and sport. The essays capture different aspects of the winner-take-all phenomenon by looking at citation and publication inequality in a top tier economics journal namely the American Economic Review. How globalisation and corruption influence the accumulation of extraordinary wealth and finally, how in a fairly equal competition, that is in the National Rugby League in Australia, wearing red shirts could lead to a comparative advantage and hence, tip the balance between winning and losing. The results within academia indicate that a highly unequal distribution exist, in which only a few top authors or institutions produce the majority of output. Furthermore, the results obtained in the superrich environment indicate that corruption and globalisation enhances the accumulation of extraordinary wealth. Finally, the results in the sport environment are mixed. While we find support for a positive effect of wearing red jerseys in our descriptive analysis, we find a negative effect when we control at the team level. However, when we investigate the relative difference in the degree of redness between home and away team, we find a quite strong positive effect of wearing red shirts even after controlling at the team level. ii Selective Essays in Competitive Environments iii Table of Contents Keywords .................................................................................................................................................i Abstract .................................................................................................................................................. ii Table of Contents .................................................................................................................................. iii List of Figures ......................................................................................................................................... v List of Tables .........................................................................................................................................vi Dedication ............................................................................................................................................ vii Statement of Original Authorship ....................................................................................................... viii Acknowledgments ..................................................................................................................................ix CHAPTER 1: INTRODUCTION ....................................................................................................... 1 1.1 Academia ..................................................................................................................................... 5 1.1.1 Baumol’s wish list ............................................................................................................ 8 1.2 Extreme wealth ............................................................................................................................ 8 1.3 Sport ............................................................................................................................................. 9 1.4 Background Information on the Following Four Chapters ........................................................ 11 CHAPTER 2: COMPETITION IN ACADEMIA: EVIDENCE FROM THE AMERICAN ECONOMIC REVIEW. ....................................................................................................................... 13 2.1 Introduction ................................................................................................................................ 14 2.2 Top Institutions, Top Papers, and Leading Economists Publishing in the AER ........................ 16 2.3 Institutional Rankings ................................................................................................................ 18 2.4 Country Rankings ...................................................................................................................... 29 2.5 Top Papers ................................................................................................................................. 30 2.6 Publishing Frequency ................................................................................................................. 31 2.7 Top Authors ............................................................................................................................... 34 2.8 Conclusion ................................................................................................................................. 37 CHAPTER 3: COMMENT ON WILLIAM BAUMOL’S “TOWARD A NEWER ECONOMICS: THE FUTURE LIES AHEAD!” ............................................................................. 42 3.1 Introduction ................................................................................................................................ 43 3.2 Methodology .............................................................................................................................. 43 3.3 Role of Mathematics .................................................................................................................. 44 3.4 Applied Econometrics ................................................................................................................ 46 3.5 Macroeconomics ........................................................................................................................ 47 3.6 Economic History and History of Economic Thoughts ............................................................. 49 3.7 Mathematical and Quantitative Methods ................................................................................... 50 3.8 Job Openings for Economists (JOE) .......................................................................................... 51 3.9 Behavioural Economics ............................................................................................................. 52 3.10 Concluding Remarks .................................................................................................................. 53 CHAPTER 4: EXTRAORDINARY WEALTH, GLOBALIZATION, AND CORRUPTION. ... 55 Selective Essays in Competitive Environments iii iv 4.1 Introduction................................................................................................................................ 56 4.2 Methodological Approach ......................................................................................................... 58 4.2.1 Data Sets and Hypotheses ............................................................................................... 58 4.2.2 Specification of the Test Equation .................................................................................. 64 4.3 Empirical Results ....................................................................................................................... 65 4.4 Concluding Remarks.................................................................................................................. 69 4.5 Tables ......................................................................................................................................... 71 CHAPTER 5: THE RED MIST? RED SHIRTS, SUCCESS AND TEAM SPORTS. ................. 77 5.1 Introduction................................................................................................................................ 78 5.2 Data and Methodology ............................................................................................................... 87 5.3 Results ....................................................................................................................................... 92 5.4 Conclusions................................................................................................................................ 97 CHAPTER 6: CONCLUDING REMARKS .................................................................................. 101 6.1 Summary of Findings............................................................................................................... 101 6.2 Policy Implications .................................................................................................................. 103 6.3 Shortcomings ........................................................................................................................... 104 6.4 Further Research ...................................................................................................................... 105 REFERENCES .................................................................................................................................