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Rethinking Restrictions On Player Mobility In Major League Baseball


  • Joel G. Maxcy


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.

Suggested Citation

  • Joel G. Maxcy, 2002. "Rethinking Restrictions On Player Mobility In Major League Baseball," Contemporary Economic Policy, Western Economic Association International, vol. 20(2), pages 145-159, April.
  • Handle: RePEc:bla:coecpo:v:20:y:2002:i:2:p:145-159

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    References listed on IDEAS

    1. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
    2. Lehn, Kenneth, 1982. "Property Rights, Risk Sharing, and Player Disability in Major League Baseball," Journal of Law and Economics, University of Chicago Press, vol. 25(2), pages 343-366, October.
    3. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-930, December.
    4. Cymrot, Donald J & Dunlevy, James A, 1987. "Are Free Agents Perspicacious Peregrinators?," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 50-58, February.
    5. Daly, George & Moore, William J, 1981. "Externalities, Property Rights and the Allocation of Resources in Major League Baseball," Economic Inquiry, Western Economic Association International, vol. 19(1), pages 77-95, January.
    6. Stefan Kesenne, 2000. "Revenue Sharing and Competitive Balance in Professional Team Sports," Journal of Sports Economics, , vol. 1(1), pages 56-65, February.
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    Cited by:

    1. Fort, Rodney & Maxcy, Joel & Diehl, Mark, 2016. "Uncertainty by regulation: Rottenberg׳s invariance principle," Research in Economics, Elsevier, vol. 70(3), pages 454-467.
    2. 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.
    3. 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;The Industrial Organization Society, vol. 39(3), pages 187-205, November.
    4. Helena Fornwagner, 2017. "Incentives to lose revisited: The NHL and its tournament incentives," Working Papers 2017-07, Faculty of Economics and Statistics, University of Innsbruck.
    5. 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.
    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. 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.
    8. 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.
    9. Joel Maxcy, 2009. "Progressive Revenue Sharing in Major League Baseball: The Effect on Player Transfers and Talent Distribution," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 35(3), pages 275-297, November.
    10. 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).
    11. Jan Šíma, 2013. "Static Competitive Balance of Three Chosen Central European Football Leagues," Ekonomika a Management, University of Economics, Prague, vol. 2013(4).
    12. Meletakos, Panagiotis & Chatzicharistos, Dimitrios & Apostolidis, Nikolaos & Manasis, Vasilios & Bayios, Ioannis, 2016. "Foreign players and competitive balance in Greek basketball and handball championships," Sport Management Review, Elsevier, vol. 19(4), pages 391-401.

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