Property rights and resource use: evidence from MLB starting pitchers

Marc A. Poitras and Daniel Sutter

Applied Economics, 2020, vol. 52, issue 60, 6514-6524

Abstract: We conduct a unique test of the efficiency of property rights in major league baseball. The rights to the services of players are resources that can be possessed by the clubs or by the players themselves. This right was effectively reassigned from the club to the individual player when free agency was introduced in 1976. Players, however, only qualify for free agency after 6 years of service, and until that time a temporary property right is possessed by the club. In the absence of efficient bargaining, clubs that possess only a temporary right do not bear the full risk of injury or disability associated with using pitchers. Clubs in this situation can therefore have an incentive to overuse star pitchers. This theoretical prediction is supported by the statistical inferences of our econometric models.

Date: 2020
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DOI: 10.1080/00036846.2020.1803486

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