| The paper studies very aspects of NBA salary system, and salary cap is the core of the NBA salary system which regulates the salary cap and salary floor; salary cap exception and luxury tax; because of salary cap, NBA can keep the financial different transferring to power rank different. And because of salary cap exception, rich clubs can sign free agents beyond the salary cap restrictions so that it can guarantee the highlights happen in NBA. Measures of assessing competitive balance include a theoretical examination of standard deviations, gini coefficients, HHI and the centralization of champions. By using standard deviations and convergence of champions, we found out that the NBA salary cap is effective less in improving the competitive balance comparing with the index before and after the salary cap executed. Then we analyzed the reasons. The contents above combined with other aspects of NBA salary cap, the essence of salary cap is that the salary cap is the output between bosses and players'fights. Through the salary cap, players can get the steady income; for the bosses, they transferred some operating risks to the players and they can control the salary at a steady level. Representatives of bosses and players, the CEO of NBA and the chairman of labor union helped the salary cap system put into effect. The salary cap decreases the fights between bosses and players and keeps the stability of NBA. In one hand, the salary cap protects the free market of NBA, in another hand; it also limits the development of monopoly. The salary cap keeps NBA develop smoothly.
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