Progressive Revenue Sharing in Major League Baseball: The Effect on Player Transfers and Talent Distribution |
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Authors: | Joel G Maxcy |
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Institution: | (1) Central Michigan University, Mt. Pleasant, MI 48859, USA |
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Abstract: | Major League Baseball’s system of sharing revenue between clubs was altered significantly in 1997. The arrangement progressively
redistributes income from the highest toward the lowest revenue-generating clubs. The purpose of the new method was to alleviate
growing disparity in revenue generation. However, under the progressive system the lowest revenue producing clubs bear the
highest marginal tax rates, and theoretically problems of competitive imbalance may be amplified. Changes in talent distribution
are observed by analyzing player mobility; an empirical model of player transfers is developed and tested. Confirmation is
obtained that low revenue clubs acted on increased incentives to divest talent. |
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