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Does the Assignment of Property Rights Encourage or Discourage Shirking?

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  • Daniel R. Marburger

Abstract

Economic organization literature suggests that property rights assignment affects employee incentives to shirk. Specifically, when firms own employee property rights, the rents from increased effort accrue to the employer and encourage shirking. Applied to major league baseball (MLB), this suggests that the conversion from the reserve clause to free agency should increase player effort. However, free agency also saw an increase in the number of guaranteed multiyear contracts, which also creates shirking incentives. This article investigates the net impact of property rights assignment on shirking in MLB. An empirical model reveals that free agents with 1- and 2-year contracts outperform comparable reserve era players over the same time frame. The performance of free agents with contracts exceeding 2 years do not differ from that of comparable reserve era players over the same time period.

Suggested Citation

  • Daniel R. Marburger, 2003. "Does the Assignment of Property Rights Encourage or Discourage Shirking?," Journal of Sports Economics, , vol. 4(1), pages 19-34, February.
    • Handle: RePEc:sae:jospec:v:4:y:2003:i:1:p:19-34
    DOI: 10.1177/1527002502239656
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    References listed on IDEAS

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    1. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64(3), 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. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    4. Kahn, Lawrence M, 1993. "Free Agency, Long-Term Contracts and Compensation in Major League Baseball: Estimates from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 157-164, February.
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    Cited by:

    1. Daniel R. Marburger, 2009. "Why Do Player Trades Dominate Sales?," Journal of Sports Economics, , vol. 10(4), pages 335-350, August.
    2. Miguel-Ángel Gómez & Carlos Lago & María-Teresa Gómez & Philip Furley, 2019. "Analysis of elite soccer players’ performance before and after signing a new contract," PLOS ONE, Public Library of Science, vol. 14(1), pages 1-14, January.
    3. Romain Gauriot & Lionel Page, 2019. "Fooled by Performance Randomness: Overrewarding Luck," The Review of Economics and Statistics, MIT Press, vol. 101(4), pages 658-666, October.
    4. Feddersen, Arne & Humphreys, Brad & Soebbing, Brian, 2012. "Cost Incentives in European Football," Working Papers 2012-13, University of Alberta, Department of Economics.
    5. Gauriot, Romain & Page, Lionel, 2018. "Fooled by randomness: over-rewarding luck," Working Papers 2018-03, University of Sydney, School of Economics.
    6. Jahn K. Hakes & Chad Turner, 2008. "Long-Term Contracts in Major League Baseball," Working Papers 0831, International Association of Sports Economists;North American Association of Sports Economists.

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