Rockerbie, Duane W (2010): Marginal revenue product and salaries: Moneyball redux.
Download (351kB) | Preview
Scully (1974) used a two equation regression model to estimate a baseball player’s salary to compare to the actual salary the player earned in order to determine if a player is paid his net marginal revenue product. We replicate the spirit of that paper, but introduce several useful innovations to estimate net marginal revenue products for a large sample of free-agent baseball players. Our results suggest that the highest paid free agents are overpaid, while all other free agents are underpaid or paid appropriately. We found no evidence for the notion that some clubs may be more adept at finding “bargain” free agents.
|Item Type:||MPRA Paper|
|Original Title:||Marginal revenue product and salaries: Moneyball redux|
|Keywords:||net marginal revenue product; free agents; baseball|
|Subjects:||J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity
L - Industrial Organization > L8 - Industry Studies: Services > L83 - Sports ; Gambling ; Restaurants ; Recreation ; Tourism
|Depositing User:||Duane Rockerbie|
|Date Deposited:||16. Mar 2010 01:22|
|Last Modified:||12. Feb 2013 09:52|
Brown, Kenneth & Lisa Jepsen. The impact of team revenues on MLS salaries. Journal of Sports Economics, 10(2), 2009, 192-203.
Bruggink, T. & D. Rose. Financial restraint in the free agent labor market for major league baseball: Players look at strike three. Southern Economic Journal, 57(4), 1990, 1029-43.
Coffin, Donald A. If you build it, will they come? Attendance and new stadium construction in J. Fizel, E. Gustafson, L. Hadley (Eds.), Baseball Economics: Current Research. Westport, Conn. and London: Greenwood, Praeger, 1996, 33-46.
Fort, Rodney. Pay and performance: Is the field of dreams barren? in P. Sommers (Ed.), Diamonds are forever: The business of baseball. Washington, D.C.: The Brookings Institution, 1992, 134-60.
Krautmann, Anthony C. What is wrong with Scully’s estimates of a player’s marginal revenue product? Economic Inquiry, 37(2), 1999, 369-81.
Krautmann, Anthony & James Ciecka. The post season value of an elite player to a contending team. Journal of Sports Economics, 10(2), 2009, 168-79.
Leeds, M. & Kowalewski, S. Winner take all in the NFL: The effect of the salary cap and free agency on the compensation of skill position players. Journal of Sports Economics, 2(3), 2001, 244-56.
MacDonald, D. & Reynolds, M. Are baseball players paid their marginal products? Managerial and Decision Economics, 15, 1994, 443-57.
Scully, Gerald. Pay and performance in major league baseball. American Economic Review, 64(5), 1974, 915-30.
__________. The business of major league baseball. Chicago, IL: University of Chicago Press, 1989.
Zimbalist, Andrew. Salaries and performance: beyond the Scully model. in P. Sommers (Ed.), Diamonds Are Forever: The Business of Baseball. Washington, D.C.: The Brookings Institution, 1992, 109-33.
_______________. Reflections on salary shares and salary caps. Journal of Sports Economics, 11(1), 2010, 17-28.