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The Economics of Baseball Contraction

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  • Roger G. Noll

Abstract

In the fall of 2001, Commissioner Bud Selig announced that two teams would be eliminated from Major League Baseball. After ensuing litigation and collective bargaining, contraction has been postponed until 2007 but remains a possibility. This article examines the economics of contraction of teams in a sports league, first developing the basic welfare economics of expansion and contraction and then investigating whether the private incentives of existing teams lead to inefficient contraction decisions. The core finding is that, using financial information from the 2001 season, all teams in Major League Baseball probably generate positive net social benefits, but the existing teams will benefit by approximately $1 billion from the elimination of the two weakest teams.

Suggested Citation

  • Roger G. Noll, 2003. "The Economics of Baseball Contraction," Journal of Sports Economics, , vol. 4(4), pages 367-388, November.
    • Handle: RePEc:sae:jospec:v:4:y:2003:i:4:p:367-388
    DOI: 10.1177/1527002503257543
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    References listed on IDEAS

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    1. Allen R. Sanderson & John J. Siegfried, 2003. "Thinking about Competitive Balance," Journal of Sports Economics, , vol. 4(4), pages 255-279, November.
    2. El-Hodiri, Mohamed & Quirk, James, 1971. "An Economic Model of a Professional Sports League," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1302-1319, Nov.-Dec..
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    Cited by:

    1. John R. Crooker & Aju J. Fenn, 2007. "Sports Leagues and Parity When League Parity Generates Fan Enthusiasm," Journal of Sports Economics, , vol. 8(2), pages 139-164, May.
    2. Lawrence Kahn, 2003. "Sports League Expansion and Economic Efficiency: Monopoly Can Enhance Consumer Welfare," CESifo Working Paper Series 1101, CESifo.
    3. Stefan Kesenne, 2009. "The Optimal Size of a Sports League," International Journal of Sport Finance, Fitness Information Technology, vol. 4(4), pages 264-270, November.
    4. Roger G. Noll, 2003. "The Organization of Sports Leagues," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(4), pages 530-551, Winter.
    5. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    6. John K. Wilson & Richard Pomfret, 2009. "Government Subsidies for Professional Team Sports in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(3), pages 264-275, September.
    7. Stefan Kesenne, 2015. "The Single Entity Status of a Sports League," Journal of Sports Economics, , vol. 16(8), pages 811-818, December.
    8. Lawrence M. Kahn, 2007. "Markets: Cartel Behavior and Amateurism in College Sports," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 209-226, Winter.

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