Graduation Year

Fall 2013

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Second Department

Philosophy, Politics, and Economics (PPE)

Reader 1

Eric Helland

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2013 Benjamin D. Pyle

Abstract

This paper explores the monopsonistic implications of restricting bargaining power through the rookie draft and the concept of countervailing forces. It examines both the legal framework and the empirical outcomes of the court’s policy choices. This paper accomplishes this inquiry by exploiting the fact that players drafted late in the last round tend to be similar to players selected as undrafted free agents in expectation. This allows a natural experiment on the impact of the draft. In order to measure the impact of the draft, this paper examines career outcomes both in terms of compensation and length. I ultimately find little evidence that the draft creates monopsony power, and I provide some evidence suggesting that monopsony power impacts all rookies, as one would expect from an insider-outsider model.

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