A Principal-Agent Model of Contracting in Major League Baseball
AbstractTraditional 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).
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2003-01.
Length: 14 pages
Date of creation: Jan 2003
Date of revision:
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- 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.
- Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
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