Baseball
Overview:
Baseball is America's national pastime. This gives the industry huge economic opportunities. Thousands, maybe millions of people go to baseball games each year, which means a lot of money is moving through baseball stadiums with people buying tickets, merchandise, and food. Baseball cards also have a huge market, with rare cards going for millions of dollars a piece. We chose this topic because we thought it would be interesting, and there are many questions that arise when thinking about the economics of baseball. Our main research question is: is it a good thing that the MLB has a monopoly on professional baseball?
Is it a good thing that the MLB has a monopoly on professional baseball?
Monopolies:
There are many different definitions for monopoly, but a monopoly is when a single company owns an entire industry. A monopoly can also be described as the exclusive possession or control of the supply or trade in a commodity or service. The MLB clearly has a monopoly on professional baseball. Catherine Pellerin writes "The MLB monopoly controls every aspect of its teams, one of which is its venue ". The MLB controls how much it's players make, what cities and teams they can play at, determines which teams play which other teams, and the rules of baseball. This is a lot of control for one organization, clearly giving the MLB a monopoly over baseball. The MLB's monopoly is even exempted by the government, making it perfectly legal.
Competition:
There is clearly competition on the surface of the MLB. Different teams compete for fame and money in the sport of baseball. Different teams buy and trade players in order to give them an advantage over the competition. But is it really competition if the MLB controls every aspect of the competition? The MLB controls which teams play which teams, where they play, and how much money those teams make. They could give one team more money to get better players, or rig the match ups so one team has an advantage. There also is no competition between different leagues of baseball, because there is only one monopolizing league; the MLB. Peter Bendix writes "In 1915 the Federal League ran into difficulties. Major League baseball had attempted to operate with three leagues in 1884 and 1890 and had failed both times.". The MLB simply crushes all competition that comes up against it, creating a dangerous monopoly over professional baseball.
Incentives:
The incentives for the player in the MLB is to get the title of World Series Champions, but no matter who wins each person will be payed the same amount as usual. If there were multiple leagues the good players would be more spread out and the smaller teams won't have as much of a chance of getting a useful player and less of a chance to win or to reach the final teams. The MLB has a monopoly on baseball because they control the incentives and can manipulate them to help their league. The MLB controls how much their players make, giving them rewards for preforming well. The MLB writes "Incentives in contracts allow players to earn additional money by achieving certain predetermined benchmarks. "
Evidence
Pellerin, Catherine. “The Monopoly of Major League Baseball – Columbia Undergraduate Law Review.” Columbia Undergraduate Law Review, 3 May 2015, blogs.cuit.columbia.edu/culr/2015/05/03/the-monopoly-of-major-league-baseball/.
Bendix, Peter. “The History of Baseball's Antitrust Exemption.” Beyond the Box Score, Beyond the Box Score, 3 Dec. 2008, www.beyondtheboxscore.com/2008/12/3/678134/the-history-of-baseball-s.
MLB, MLB. “What Is a Incentive Clause? | Glossary.” Major League Baseball, 24 June 2016, m.mlb.com/glossary/transactions/incentive-clause.
Conclusion:
It is hard to say whether or not the MLB's monopoly is a bad thing. On one hand, having complete control over an entire industry is way too much power for one organization. The MLB controls every aspect of professional baseball, from the incentives of the players to the match ups of games. The MLB has also crushed every possible competitor before losing any power. But on the other hand, saturating the marked with different leagues would lower the overall quality of baseball, with the best players being spread out among multiple leagues. The MLB also doesn't seem to abuse their power that much by rigging games or over paying certain teams. Overall, however, we believe that based on all the evidence, the MLB's government sanctioned monopoly is a bad thing.
