Strategic Free Agency in Baseball

Duane Rockerbie

Journal of Sports Economics, 2009, vol. 10, issue 3, 278-291

Abstract: This article investigates whether a greater supply of free-agent baseball players at a particular position has any effect on negotiated salaries. A simple auction model of free-agent salaries with many bidders is developed that suggests that a greater supply of positional free-agent players should lower the path of winning bids in sequential player auctions. A drop in the valuation of the marginal bidder in a sequence of player auctions also drops the path of winning bids. There may be an incentive to defer free agency by including an option year in a player contract. The effect of the number of free agents on salaries is tested using free-agent salary settlements for the 1997-2002 seasons.

Keywords: free agents; sequential auctions; baseball (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:10:y:2009:i:3:p:278-291

DOI: 10.1177/1527002508329859

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