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Ownership of property-rights and the allocation of talents

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Under the reserve-clause system that assigns the property-rights on the Major League Baseball players' services to teams, player transfers are negotiated between teams without the involvement of players. In contrast, under the current free-agency system, players with free-agent status negotiate directly with potential suitors. Thus, the system assigns the property-rights to players. Using data extracted from the Baseball Archive (, this article examines the effect of the change in the property-rights assignment on the allocation of talents across teams. We find that the change increased large-market teams' shares of veteran all-star players and the concentration of senior players.

Document Type: Research Article


Affiliations: Department of Economics, National University of Singapore, Singapore 117570

Publication date: December 1, 2009

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