Friday, May 22, 2020

Major League Baseball’s Antitrust Exemption and Pay

Louis-Daniel Pape, CREST - Institut Polytechnique de Paris addresses Major League Baseball’s Antitrust Exemption and Pay.

ABSTRACT: The U.S. Supreme Court exempted Major League Baseball from the Sherman Antitrust Act. As a result, debuting players are still precluded from switching teams, rendering owners de facto monopsonies. By how much does this lower wages? Using a quasi-random discontinuity in the rule determining eligibility for Arbitration, by which a third party determines the player’s wage to a level commensurate with his market value, this exemption is found to have lowered wages by at least 30%.

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