The Major League Baseball (MLB) organization possess monopsony power to exploit players who are inexperienced. This study examines how these players are compensated versus how they should be compensated, based on their performance on the field. This analysis uses data from 2015-2017, provided by Baseball Reference and the MLB. I start by looking at market power and bargaining power in the theory chapter to contextualize the claims that inexperienced players are underpaid and experienced players are overpaid. I model this by reviewing different articles that deal with players’ salary and their MRP, to see if they are paid what they deserve to be paid. Lastly, I run multiple linear regressions on team revenue, team wins, and player statistics to come up with an estimate for a player’s MRP and compare it to their salaries to see if players are overpaid, underpaid, or paid accurately.
Dippman, Chandler, "Pay and Performance with Market Power Consideration in the MLB" (2019). Senior Independent Study Theses. Paper 8530.
Bachelor of Arts
Senior Independent Study Thesis
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