A Principal-Agent Model of Contracting in Major League Baseball

Thomas J. Miceli

Journal of Sports Economics, 2004, vol. 5, issue 2, 213-220

Abstract: Traditional economic analyses of the reserve clause in major league baseball view it as having arisen from the superior bargaining of owners compared to players. This article interprets it instead as promoting efficient investment by teams in player development, given the transferability of player skills to other teams. Using a principal-agent framework, the article shows that limited player mobility emerges as part of the optimal contract between players (principals) and teams (agents).

Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:5:y:2004:i:2:p:213-220

DOI: 10.1177/1527002503257210

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