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On the Evolution of Competitive Balance: The Impact of an Increasing Global Search
Author(s) -
Schmidt Martin B.,
Berri David J.
Publication year - 2003
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbg037
Subject(s) - coase theorem , economics , balance (ability) , league , competitive equilibrium , agency (philosophy) , amateur , distribution (mathematics) , microeconomics , order (exchange) , property rights , transaction cost , law , political science , medicine , mathematical analysis , philosophy , physics , mathematics , epistemology , finance , astronomy , physical medicine and rehabilitation
The Coase theorem maintains that where free‐market precepts exist, the allocation of property rights does not impact the distribution of resources. An application to Major League Baseball suggests that institutions such as free agency and the reverse‐order amateur draft would not impact player distributions and therefore would not impact competitive balance. The present study finds that the distribution of wins is generally consistent with the precepts of the Coase theorem and therefore suggests a course for those who wish to alter the level of competitive balance: Major League Baseball should increase its focus on expanding the size of its labor pool. (JEL O15 , L83 , C22 )