Major League Baseball’s Antitrust Exemption and Pay

31 Pages Posted: 23 Apr 2020

See all articles by Louis-Daniel Pape

Louis-Daniel Pape

CREST - Institut Polytechnique de Paris

Date Written: March 26, 2020

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%.

Keywords: Monopsony, Antitrust, Non-compete, Reserve Clause

JEL Classification: L13,J31, K21,L4

Suggested Citation

Pape, Louis-Daniel, Major League Baseball’s Antitrust Exemption and Pay (March 26, 2020). Available at SSRN: https://ssrn.com/abstract=3561714 or http://dx.doi.org/10.2139/ssrn.3561714

Louis-Daniel Pape (Contact Author)

CREST - Institut Polytechnique de Paris ( email )

Route de Saclay
Palaiseau, 91120
France

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