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A Principal-Agent Model of Contracting in Major League Baseball

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  • Thomas J. Miceli

Abstract

Traditional economic analyses of the reserve clause in major league baseball view it as having arisen from the superior bargaining of owners compared to players. This article interprets it instead as promoting efficient investment by teams in player development, given the transferability of player skills to other teams. Using a principal-agent framework, the article shows that limited player mobility emerges as part of the optimal contract between players (principals) and teams (agents).

Suggested Citation

  • Thomas J. Miceli, 2004. "A Principal-Agent Model of Contracting in Major League Baseball," Journal of Sports Economics, , vol. 5(2), pages 213-220, May.
    • Handle: RePEc:sae:jospec:v:5:y:2004:i:2:p:213-220
    DOI: 10.1177/1527002503257210
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    References listed on IDEAS

    as
    1. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64, pages 242-242.
    2. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    3. Craig A. Depken II, 2002. "Free Agency and the Concentration of Player Talent in Major League Baseball," Journal of Sports Economics, , vol. 3(4), pages 335-353, November.
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    Cited by:

    1. Thomas J. Miceli, 2022. "Investing in talent development: Theory and applications," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1641-1650, September.
    2. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    3. Thomas J. Miceli, 2020. "Financing Talent Development: The Baseball Reserve System and the Hollywood Star System," Working papers 2020-22, University of Connecticut, Department of Economics.

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