This article interested me because it proved economics can be applied to just about anything in life, even an NBA finals basketball game. This blog entitled “Economical NBA Slam Dunk" was written by Stephen Popick, an economist, who used economic reasoning when deciding on which team (Lakers or Pistons) to place a bet on. Although odds were highly stacked on Lakers side, according to most sports analysts, Popick still placed money on the Pistons. Popick came to this conclusion by comparing the two teams statistics in years past. From these statistics, Popick determined that the Lakers had become a stagnant monopoly. They did not have the competition to keep them on their toes and striving to stay on top. They began slacking off. Popick also demonstrated there was a power struggle between the two main players of the Lakers (Kobe and Shaq) which also may have lead to their eventual demise. Conversely, the Pistons worked as a team with everyone doing their best to eventually obtain their goal of an NBA championship title. The Lakers worked as individuals out for themselves. The individuals of the Lakers did not collude and cooperate for the good of team therefore they did not obtain maximum efficiency.
Popick demonstrated the inability of a monopoly to produce long term positive results when he commented:
While in the Long Run, the Lakers have performed mightly, monopolies tend to lose efficiency over time in the face of little competition. A more ‘competitive’ firm found a way to enter. Congrats to the Pistons.
What I took from this article was that power in monopolies cannot last forever. It is the nature of monopolies to produce less efficiently than is possible. Perhaps the Lakers can be considered to be more like an Oligopoly of individual players that should have colluded to get best results, but when it came down to the game, it was every man for himself. A couple of players individual success may have increased, but the teams productivity and efficiency on the whole decreased eventually causing the once almighty Lakers to be beaten by a competitive under dog team.