Quantile Insights on Market Structure and Worker Salaries: The Case of Major League Baseball

2019 ◽  
Vol 20 (8) ◽  
pp. 1066-1087 ◽  
Author(s):  
Rodney Fort ◽  
Young Hoon Lee ◽  
Taeyeon Oh
Keyword(s):  
Empirical Investigation ◽  
Major League Baseball ◽  
Marginal Revenue ◽  
Total Revenue ◽  
Marginal Revenue Product ◽  
Major League ◽  
Independent Variable ◽  
The Impact ◽  
Do So ◽  
Revenue Product

The vast majority of the empirical investigation of player marginal revenue product (MRP) and monopsony exploitation rates (MER) implicitly assumed that MRP is constant across the revenue distribution of teams. The few works that do attempt to capture the impact of revenue variation across teams do so via independent variable specification. We bring quantile estimation to bear that allows MRP to vary across the entire revenue distribution in Major League Baseball. Completely in keeping with economic common sense, MRP increases as total revenue rises (to higher and higher quantiles). As with past findings, there is interesting MER dispersion over the length of player tenure in the league and between star and mediocre players. Heretofore unexplored, we also find interesting dispersion in MRP and MER between larger revenue and smaller revenue markets. Our results suggest that independent variable specifications overstate MRP and MER for smaller revenue teams and understate the same for larger revenue team.

Is offense worth more than defense and pitching? Marginal revenue product and revenue sharing in major league baseball

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Justin Andrew Ehrlich ◽  
Joel M. Potter
Keyword(s):  
Major League Baseball ◽  
Revenue Sharing ◽  
Ordinary Least Squares ◽  
Decision Makers ◽  
Marginal Revenue ◽  
Content Type ◽  
Marginal Revenue Product ◽  
Major League ◽  
Team Decision ◽  
Revenue Product

PurposeSports economists have consistently found that winning positively impacts team revenue fans prefer to allocate their entertainment dollars to winning teams. Previous research has also found that fans do not have a preference for how their team wins. However, this research ignores the significant variability in revenue that can exist between teams with similar attendance figures. The authors contribute to the literature by testing whether profit maximizing teams should pay different amounts for different types of production by estimating the marginal revenue product of a win due to offense, defense and pitching.Design/methodology/approachUsing data from the 2010–2017 Major League Baseball seasons and an Ordinary Least Squares-Fixed Effects approach, the authors test whether a unit of offensive, defensive and pitching production generates differing amounts of team revenue both before and after revenue sharing. The authors then test if team Wins Above Replacement is a good approximation of actual wins while accounting for the previously observed nonlinear relationship between wins and revenue.FindingsThe authors found that marginal revenue product estimates in the postrevenue sharing model for mowar, pwar and dwar are nearly identical to each other. Further, after predicting prerevenue sharing, the authors find that fans have no preference for mowar, pwar or dwar play styles.Originality/valueThe findings illustrate that team decision-makers appear to be acting irrationally by paying more for offense than they do for defense. Thus, the findings suggest that team decision-makers should value defensive wins and pitching wins at the same rate as offensive wins on the free agent market.

scholarly journals Revenue Sharing and Player Salaries in Major League Baseball

2015 ◽  
Vol 18 (8) ◽  
pp. 831-849 ◽  
Author(s):  
James Richard Hill ◽  
Nicholas A. Jolly
Keyword(s):  
Collective Bargaining ◽  
Major League Baseball ◽  
Revenue Sharing ◽  
Collective Bargaining Agreement ◽  
Tax Rates ◽  
Marginal Revenue ◽  
Marginal Revenue Product ◽  
Major League ◽  
Salary Distribution ◽  
Revenue Product

This article analyzes how changes made to the revenue sharing agreement in the 2007 Major League Baseball collective bargaining agreement influenced the salaries of position players and pitchers. The tax rates associated with revenue sharing decreased following ratification of the 2007 agreement. Theoretically, these changes should increase players’ marginal revenue product and, therefore, salaries. Results indicate that position players experienced an increase in salary following the 2007 agreement. Pitchers’ salaries also increased, but by a smaller amount. The effect of the 2007 agreement was different throughout the salary distribution for position players, but uniform throughout the distribution for pitchers.

How Much Did Baseball’s Antitrust Exemption Cost Bob Gibson?

2019 ◽  
Vol 64 (4) ◽  
pp. 566-583 ◽  
Author(s):  
David J. Berri ◽  
Anthony C. Krautmann
Keyword(s):  
Major League Baseball ◽  
Free Agency ◽  
Baseball Players ◽  
Marginal Revenue Product ◽  
The Supreme Court ◽  
Antitrust Laws ◽  
Major League ◽  
Hall Of Fame ◽  
Baseball Team ◽  
Revenue Product

Major League Baseball was granted an exemption to antitrust laws in 1922 by the Supreme Court. This exemption led to the creation of a monopsonistic labor market that prevented baseball players from fielding offers from other organizations once that player signed with any Major League Baseball team. Economic theory predicts that such a market would reduce a worker’s wage below a worker’s marginal revenue product. The question this study seeks to address is how much wage depression existed before the introduction of free agency in baseball in 1976. Specifically, we will examine the Hall-of-Fame career of Bob Gibson, a career that ended in 1975. Our examination will not only explore the standard approach economists have used to answer this question for more than forty years but also a simpler approach that gives a more realistic answer to the question.

scholarly journals The Impact of Temperature on Major League Baseball

2013 ◽  
Vol 5 (4) ◽  
pp. 359-366 ◽  
Author(s):  
Brandon Lee D. Koch ◽  
Anna K. Panorska
Keyword(s):  
United States ◽  
Major League Baseball ◽  
The United States ◽  
Cold Weather ◽  
Baseball Game ◽  
Batting Average ◽  
Warm Weather ◽  
Major League ◽  
National League ◽  
The Impact

Abstract Major League Baseball is played from the beginning of April through the end of October each year, encompassing three of the four meteorological seasons: spring, summer, and fall. The 30 teams play in cities across the United States and Canada in many types of weather. This work studies the impact of temperature on a Major League Baseball game by examining the association between temperature and several Major League Baseball game statistics, including runs scored, batting average, slugging percentage, on-base percentage, home runs, walks, strikeouts, hit-batsmen, stolen bases, and errors. Data from 22 215 games, spanning the 2000–11 regular seasons, were studied. Temperature was categorized as “cold,” “average,” and “warm.” Analyses were performed on the following populations: all Major League Baseball games, games played in the National League, games played in the American League, and games played in 23 different stadiums that are currently being used by Major League Baseball teams. Home and away teams' performances were analyzed separately for each population of games. The results of this study show that runs scored, batting average, slugging percentage, on-base percentage, and home runs significantly increase while walks significantly decrease in warm weather compared to cold weather.

Sign in / Sign up

Export Citation Format

Share Document