Question

. From an economic point of view, should professional tennis tournaments pay the mensand womens bracket an equal amount of prize money? Why or why not? How might onedetermine the economically fair amount to pay each bracket? Why might the fair valuebe difficult to determine?

Answer 1

Paying an equal amount of money to men's and women's bracket should depend upon the sponsorship attracted by each bracket, viewership, television and other media rights and other sources of revenue that are attracted by these two brackets separately. If the total revenue streams are equal for both the brackets, then they should be paid the equal amount of prize money. If not, then it should be in proportionate amount to make it fair. As per the equi-marginal principle of economics, marginal productivity is reviewed. If revenues are same, then marginal productivity is same for both the bracket and they can be equally paid the prize money, otherwise, proportionate distribution should take place.

The fair amount will be determined by the final cash inflows attracted by the each bracket. Accordingly, proportionate amount should be distributed as a prize money.

Here, fair value might be difficult to determine, because revenues come jointly for men and women and it is difficult to make divisions. Further, audience size is also combined. For the top women player, more people will watch matches that that of less popular men players. So, it is difficult to determine the fair value.