This research uses a new source of market price information to explore the issue of monopsonistic exploitation in sports labor markets. It will examine monopsonistic exploitation in Major League Baseball by using baseball card prices to measure a player's star quality, a heretofore unmeasured part of a player's marginal revenue product. Calculating MRP's using performance measures and star quality measures allows us to obtain a more accurate calculation of a player's true marginal revenue product than has been computed in previous studies. Complete time series data exist for baseball card prices for all players. Presumably these card prices reflect more accurately the fan-appeal of a player and his ability to influence team revenues. We model this connection by first regressing card prices on various player performance statistics. We take the residual from this equation to represent a player's non-performance appeal, or star quality, and use the residual as a key independent variable along with traditional team and market variables in an explanatory model of team attendance. We then use these estimates to calculate marginal revenue products for players in each of the years from 1990-1993. Comparison of these estimates with actual salaries determines rates of exploitation for baseball players. We then compare exploitation rates for players based on position, performance, free agency status, team market size and race. In addition, we generate lists of top revenue producing players, most underpaid players, and most overpaid players. These examinations allow us to determine the efficiency of a labor market with perfect mobility.
Results indicate that free agents receive a much greater percentage of their marginal revenue product, an outcome that is predicted for competitive markets in a neo-classical model. We also find that hitters are significantly more exploited than pitchers. Finally, we find that teams that operate in larger markets are significantly more exploitive than teams that operate in smaller markets. These results are particularly interesting as many of these issues have been of special concern to both labor and management in Major League Baseball since the labor dispute of 1994.