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What's Wrong with Scully-Estimates of a Player's Marginal Revenue Product


  • Krautmann, Anthony C


Estimates of baseball players' marginal revenue product, derived from the methodology introduced by Gerald Scully over twenty years ago in the American Economic Review, suggest that even the highest-paid players are grossly underpaid. But, given the fiercely competitive bidding process for free agents, it is hard to believe that owners can maintain salaries significantly below marginal revenue product. In this paper, an alternative approach for estimating a player's economic value is proposed. It uses market information gleaned from free agent contract negotiations. When applied to the less-mobile segment of the player market, this method yields much more reasonable estimates of players' marginal revenue products. Copyright 1999 by Oxford University Press.

Suggested Citation

  • Krautmann, Anthony C, 1999. "What's Wrong with Scully-Estimates of a Player's Marginal Revenue Product," Economic Inquiry, Western Economic Association International, vol. 37(2), pages 369-381, April.
  • Handle: RePEc:oup:ecinqu:v:37:y:1999:i:2:p:369-81

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    References listed on IDEAS

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    Cited by:

    1. Peter K. Hunsberger & Seth R. Gitter, 2015. "What is a Blue Chip Recruit Worth? Estimating the Marginal Revenue Product of College Football Quarterbacks," Journal of Sports Economics, , vol. 16(6), pages 664-690, August.
    2. Aya S. Chacar & William Hesterly, 2008. "Institutional settings and rent appropriation by knowledge-based employees: the case of Major League Baseball," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(2-3), pages 117-136.
    3. John D. Burger & Stephen J.K. Walters, 2008. "The Existence and Persistence of a Winner's Curse: New Evidence from the (Baseball) Field," Southern Economic Journal, Southern Economic Association, vol. 75(1), pages 232-245, July.
    4. Haupert, Michael & Murray, James, 2011. "Regime Switching and Wages in Major League Baseball under the Reserve Clause," MPRA Paper 29094, University Library of Munich, Germany.
    5. R Simmons & D Berri, 2007. "Does it pay to specialize? The story from the Gridiron," Working Papers 591134, Lancaster University Management School, Economics Department.
    6. 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.
    7. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    8. repec:wly:mgtdec:v:38:y:2017:i:5:p:676-688 is not listed on IDEAS
    9. Peter von Allmen & Michael A . Leeds & Brad R. Humphreys, 2011. "Sports Economics as Applied Microeconomics," Chapters,in: International Handbook on Teaching and Learning Economics, chapter 64 Edward Elgar Publishing.
    10. repec:eee:exehis:v:65:y:2017:i:c:p:55-67 is not listed on IDEAS
    11. Rockerbie, Duane W, 2010. "Marginal revenue product and salaries: Moneyball redux," MPRA Paper 21410, University Library of Munich, Germany.
    12. Holmes, Paul, 2011. "New evidence of salary discrimination in major league baseball," Labour Economics, Elsevier, vol. 18(3), pages 320-331, June.
    13. Roger D. Blair & Brad R. Humphreys & Hyunwoong Pyun, 2017. "Monopsony Exploitation in Professional Sport: Evidence from Major League Baseball Position Players, 2000–2011," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(5), pages 676-688, July.
    14. Oliver Dean & Fienen Mike N, 2009. "Importance of Teammate Fit: Frescoball Example," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 5(1), pages 1-30, January.
    15. Rockerbie, Duane, 2011. "The Invariance Proposition in Baseball: New Evidence," MPRA Paper 55020, University Library of Munich, Germany.
    16. repec:kap:atlecj:v:45:y:2017:i:3:d:10.1007_s11293-017-9545-7 is not listed on IDEAS

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