Salary Vs. marginal revenue product under monopsony and competition: The case of professional basketball

Scott, Frank A.; Long, James E.; Somppi, Ken

doi:10.1007/bf02304294

Cited by 94 publications

(65 citation statements)

References 10 publications

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“…8 However, taken as a whole, this line of research produces additional evidence that making the labor market more competitive leads to higher salaries than would be the case under monopsony. Nonetheless, during the 1980s there still appeared to be widespread monopsonistic exploitation in baseball, and research from this period also showed similar results for basketball (Scott, Long and Somppi, 1985).…”

Section: Evidence On the Degree Of Monopsonistic Exploitationmentioning

confidence: 66%

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The Sports Business as a Labor Market Laboratory

Kahn

2000

Journal of Economic Perspectives

393

216

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Professional sports offers a unique opportunity for labor market research. There is no research setting other than sports where we know the name, face, and life history of every production worker and supervisor in the industry. Total compensation packages and performance statistics for each individual are widely available, and we have a complete data set of worker-employer matches over the career of each production worker and supervisor in the industry. These statistics are much more detailed and accurate than typical microdata samples such as the Census or the Current Population Survey. Moreover, professional sports leagues have experienced major changes in labor market rules and structure-like the advent of new leagues or rules about free agency-creating interesting natural experiments that offer opportunities for analysis.In this paper, I focus on four areas of research on sports labor markets. First, using data on the rise and fall of rival sports leagues and the granting of free agency rights in professional sports, economists have tested whether employer monopsony lowers worker pay. Second, sports salary and performance data, and the knowledge of the race of each player in a sport, allow us to estimate the extent of discrimination in a much more detailed way than is possible in other industries. Third, changes in rules about the draft and player movement allow us to examine the claim of the Coase theorem that with complete information but no transactions costs or wealth effects, the ownership of a resource has no impact on the allocation of resources; rather, changes in such laws will only affect the distribution of wealth (Posner and Parisi, 1997). Finally, because of the observability of contract provisions, supervisor quality and worker behavior, one can estimate the impacts of supervision and incentives on behavior.

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Section: Evidence On the Degree Of Monopsonistic Exploitationmentioning

confidence: 66%

“…While early research found that white benchwarmers had longer careers than black benchwarmers (Johnson and Marple, 1973), more recent work does not find that benchwarmers are disproportionately white (Scott, Long and Somppi, 1985).…”

Section: Racial Discrimination In Professional Sportsmentioning

confidence: 97%

The Sports Business as a Labor Market Laboratory

Kahn

2000

Journal of Economic Perspectives

393

216

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“…Medoff (1976), Sommers and Quinton (1982), Hill (1985), and Bruggink and Rose (1985) have variously utilized Scully's model. In the meantime, Zak, et al, (1979) and Scott, et al, (1985) used data from NBA (National Basketball Association) in the United States for their research and Atkinson, et al, (1988) have used data from the NFL (National Football League) for his study using Scully's model. Porter and Scully (1982) employed a deterministic parametric approach with only two input variables to explain a baseball team's winning percent: the team's batting percent for hitter's input and ratio of strikeouts to base on balls for the pitcher's input.…”

Section: Production Functions and Effi Ciency In Professional Team Spmentioning

confidence: 99%

Evaluating Management Efficiency of Korean Professional Baseball Teams using Data Envelopment Analysis (DEA)

Kang

Lee

Sihyeong

2007

Int. J. Sport Health Sci.

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The purpose of this study is to evaluate management effi ciency of professional teams in the Korean Baseball Organization by using Data Envelope Analysis (DEA). The professional baseball teams in Korea are in urgent need of effi cient management as no teams are making profi ts and their fi nancial defi cits are growing. DEA is a technique to measure relative effi ciency when coping with multiple inputs and multiple outputs. We implemented total player salary as input item and winning percent and total fan attendance as output item to evaluate 8 teams' management effi ciency for the 2004 season. The analysis identifi ed teams operating relatively effi cient and teams that are not effi cient. The result revealed that a team's effi ciency score is not necessarily correlated to the fi nal standings in the league. Rather, teams relatively mediocre sized outperformed the teams well-known for its fi nancial abundance.

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“…With the elimination of the reserve clause, player salaries rose. Scott, Long, and Somppi (1985) compare the marginal revenue products and salaries of free agents and non-free agents in the 1980-81 season and find that the 15 non-free agents in their sample earned an average salary equal to 44% of their MRP, whereas the 11 free agents in their sample earned an average salary of 93% of their MRP.…”

mentioning

confidence: 99%

Antitrust Analysis of Sports Leagues

Pelnar

2007

SSRN Journal

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Salary Vs. marginal revenue product under monopsony and competition: The case of professional basketball

Cited by 94 publications

References 10 publications

The Sports Business as a Labor Market Laboratory

The Sports Business as a Labor Market Laboratory

Evaluating Management Efficiency of Korean Professional Baseball Teams using Data Envelopment Analysis (DEA)

Antitrust Analysis of Sports Leagues

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