Progressive Revenue Sharing in Major League Baseball: The Effect on Player Transfers and Talent Distribution

Progressive Revenue Sharing in Major League Baseball: The Effect on Player Transfers and Talent... Major League Baseball’s system of sharing revenue between clubs was altered significantly in 1997. The arrangement progressively redistributes income from the highest toward the lowest revenue-generating clubs. The purpose of the new method was to alleviate growing disparity in revenue generation. However, under the progressive system the lowest revenue producing clubs bear the highest marginal tax rates, and theoretically problems of competitive imbalance may be amplified. Changes in talent distribution are observed by analyzing player mobility; an empirical model of player transfers is developed and tested. Confirmation is obtained that low revenue clubs acted on increased incentives to divest talent. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Progressive Revenue Sharing in Major League Baseball: The Effect on Player Transfers and Talent Distribution

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Publisher
Springer Journals
Copyright
Copyright © 2009 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-009-9229-9
Publisher site
See Article on Publisher Site

Abstract

Major League Baseball’s system of sharing revenue between clubs was altered significantly in 1997. The arrangement progressively redistributes income from the highest toward the lowest revenue-generating clubs. The purpose of the new method was to alleviate growing disparity in revenue generation. However, under the progressive system the lowest revenue producing clubs bear the highest marginal tax rates, and theoretically problems of competitive imbalance may be amplified. Changes in talent distribution are observed by analyzing player mobility; an empirical model of player transfers is developed and tested. Confirmation is obtained that low revenue clubs acted on increased incentives to divest talent.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 24, 2009

References

  • Externalities, property rights, and the allocation of resources in major league baseball
    Daly, G.; Moore, W.
  • Rethinking restrictions on player mobility in major league baseball
    Maxcy, J. G.

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