Winning at All Costs: Using Law & Economics to Determine the Proper Role of Government in Regulating Performance-Enhancing Drugs in Professional Sports

The prevalence of performance-enhancing drugs (PEDs) in sports is widely recognized. Employing the analytic tools of law and economics, this note addresses the question of whether federal government action to regulate PED use in sports represents an appropriate remedy for these problems. The author begins by providing a brief history of the emer-gence of PEDs in professional sports and presenting a brief overview of fundamental law and economics tools, including concepts derived from efficiency and welfare economics, the Coase Theorem, and behavioral law and economics. Applying these tools to the question presented, the author first suggests that the potentially prohibitive transaction costs in-curred during the collective bargaining process and high enforcement costs of the bargained agreements represent two potential justifications for government regulation of PEDs in professional sports. The analysis next identifies and takes account of the externalities that attend decisions by professional athletes to use PEDs. The author weighs the argument that society’s implicit approval of PEDs represents a positive externality that potentially overshadows two negative externalities imposed by PED use in sports—negative effects on the nation’s youth and decreased public confidence in the integrity of sports—and concludes that PED use in sports has contributed to an endemic ethical crisis rather than an in-crease in social welfare. Finally, the author examines cognitive biases, particularly the “winner’s bias,” to conclude that athletes’ natural ina-bilities to accurately measure the costs incurred by their decisions to use PEDs prevent them from properly considering the externalities their deci-sions impose on the rest of society. Weighing each of these factors in an efficiency analysis, the author recommends active government regulation of PEDs in sports as the socially optimal method of addressing the use of PEDs in American professional sports.

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