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Rethinking Restrictions On Player Mobility In Major League Baseball

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  • Joel G. Maxcy

Abstract

This article considers the possibility that transactions costs and asymmetric income effects have altered the distribution of talent in the aftermath of institutional changes in Major League Baseball. This contradicts the invariance principle of Coase's theorem. Empirical evidence tracking player movement and competitive balance over the past 50 years conclusively supports these stands. Free agency, when permitted to proceed with limited intereference, has increased the rate that productive players transfer and has also improved some measures of competitive balance. Competitive balance is also shown to have improved with the implementation of the draft. Policy prescriptions calling for increased restrictions on player mobility are ill advised. Copyright 2002 Western Economic Association International.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Contemporary Economic Policy.

Volume (Year): 20 (2002)
Issue (Month): 2 (04)
Pages: 145-159

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Handle: RePEc:bla:coecpo:v:20:y:2002:i:2:p:145-159

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Cited by:
  1. Joel G. Maxcy, 2006. "Revenue Sharing in MLB: The Effect on Player Transfers," Working Papers 0615, International Association of Sports Economists & North American Association of Sports Economists.
  2. Joel G. Maxcy, 2007. "Progressive Revenue Sharing in MLB: The Effect on Player Transfers," Working Papers 0728, International Association of Sports Economists & North American Association of Sports Economists.
  3. Jan Šíma & Jan Procházka, 2011. "Compared Competitive Balance Evolution in the Dutch and the Czech Football Leagues between 1970 and 2010," Ekonomika a Management, University of Economics, Prague, vol. 2011(2).
  4. Jennifer K. Ashcraft & Craig A. Depken, II, 2007. "The Introduction of the Reserve Clause in Major League Baseball: Evidence of its Impact on Select Player Salaries During the 1880s," Working Papers 0710, International Association of Sports Economists & North American Association of Sports Economists.
  5. Philippe Cyrenne, 2013. "Player Salaries, Player Mobility and the Invariance Principle: Evidence from the National Hockey League," Departmental Working Papers 2013-04, The University of Winnipeg, Department of Economics.
  6. Joel Maxcy, 2004. "Motivating long-term employment contracts: risk management in major league baseball," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(2), pages 109-120.
  7. Joel Maxcy, 2009. "Progressive Revenue Sharing in Major League Baseball: The Effect on Player Transfers and Talent Distribution," Review of Industrial Organization, Springer, vol. 35(3), pages 275-297, November.
  8. Martin Schmidt, 2011. "Institutional Change and Factor Movement in Major League Baseball: An Examination of the Coase Theorem’s Invariance Principle," Review of Industrial Organization, Springer, vol. 39(3), pages 187-205, November.

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