Major League Baseball’s Antitrust Exemption and Pay
31 Pages Posted: 23 Apr 2020
Date Written: March 26, 2020
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: Suggested Citation