Why Do Player Trades Dominate Sales?

Daniel R. Marburger
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Daniel R. Marburger: Arkansas State University, marburge@astate.edu

Journal of Sports Economics, 2009, vol. 10, issue 4, 335-350

Abstract: Although barter is considered to be inefficient, trades are more common than player sales in professional sports. Theory indicates that when owners have identical constant risk averse preferences, the contract zone for sales shrinks relative to that for trades. Moreover, the gap between the two contract zones becomes larger as the expected quality of the player increases. Probit estimations reveal that the likelihood a player is sold rather than traded increases with age and as the percentage of remaining career productivity decreases. An inverse relationship between player quality and the likelihood of sale for is found for hitters, but not for pitchers.

Keywords: invariance hypothesis; risk aversion; expected marginal revenue product; player trades; player sales (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:4:p:335-350

DOI: 10.1177/1527002508329865

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