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Monoposony Exploitation in Professional Sport: Evidence from Major League Baseball Position Players, 2000-2011

Author

Listed:
  • Brad R. Humphreys

    (West Virginia University, Department of Economics)

  • Hyunwoong Pyun

    (West Virginia University, Department of Economics)

Abstract

Some professional athletes still face monoposony power in labor markets, underscoring the importance of estimating players' marginal revenue product (MRP) to assess its effects. We introduce two new empirical approaches, spline revenue functions and fixed-effects stochastic production functions, into the standard Scully (1974) approach to MRP estimation, and calculate Monoposony Exploitation Ratios (MERs) for position players in Major League Baseball over the 2001-2011 seasons. Estimates indicate that MERs are about 0.89 for rookie players, 0.75 for arbitration eligible players, and 0.21 for free agents. Recent collective bargaining agreements have reduced MERs for free agents, but had no effect on MERs for other players.

Suggested Citation

  • Brad R. Humphreys & Hyunwoong Pyun, 2015. "Monoposony Exploitation in Professional Sport: Evidence from Major League Baseball Position Players, 2000-2011," Working Papers 15-48, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:15-48
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    File URL: https://researchrepository.wvu.edu/cgi/viewcontent.cgi?article=1178&context=econ_working-papers
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    References listed on IDEAS

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    Cited by:

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    3. Kevin Rinz, 2018. "Labor Market Concentration, Earnings Inequality, and Earnings Mobility," CARRA Working Papers 2018-10, Center for Economic Studies, U.S. Census Bureau.
    4. Rockerbie, Duane & Easton, Stephen, 2019. "A Real Options Approach to Multi-Year Contracts in Professional Sports," MPRA Paper 93062, University Library of Munich, Germany.
    5. Brummund, Peter & Makowsky, Michael D., 2024. "Monopsony and Local Religious Clubs: Evidence from Indonesia," IZA Discussion Papers 16999, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    monoposony salary exploitation; Major League Baseball; marginal revenue product;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

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