Suppose that the competitive wage in independent hockey league is $100,000 per season. One team owner has a taste for discrimination against all foreign players. Her coefficient of discrimination against European players is 0.15, and her coefficient of discrimination against Canadian players is 0.30. a) If she pays them the market salary, what salary she feels she is paying to each group? b) Given her preferences, what salary she will consider to be “fair” for each group? c) If the supply of players were perfectly elastic, what would happen to the representation of European, Canadian, and US-born players on the team? d) Who is going to be better and who is going to be worse off in this situation? Out of: the team owner, other teams owners, European players, Canadian players, US-born players, fans.
Suppose that the competitive wage in independent hockey league is $100,000 per season. One team owner has a taste for discrimination against all foreign players. Her coefficient of discrimination against European players is 0.15, and her coefficient of discrimination against Canadian players is 0.30.
a) If she pays them the market salary, what salary she feels she is paying to each group?
b) Given her preferences, what salary she will consider to be “fair” for each group?
c) If the supply of players were perfectly elastic, what would happen to the representation of European, Canadian, and US-born players on the team?
d) Who is going to be better and who is going to be worse off in this situation? Out of: the team owner, other teams owners, European players, Canadian players, US-born players, fans.
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