The Economics of Baseball Contraction
SIEPR Discussion Paper No. 01-015
35 Pages Posted: 4 Aug 2003
Date Written: March 2003
In 2001, baseball announced plans to eliminate two teams. This essay examines the economics of contraction, including its effects on economic welfare and the incentives confronting the remaining teams. Using baseball's financial data, all teams have a positive net social benefit, but surviving teams are estimated to benefit by over $1 billion from contracting the two weakest teams.
Keywords: baseball, sports leagues
JEL Classification: L83
Suggested Citation: Suggested Citation