Mlb Monopoly Market Structure
Title page
Major League Baseball (“MLB”) Monopoly Structure
Andrew C. Brniak andrewbrniak@yahoo.com Content
Introduction…………………………………………………………………………...page 1
Subtitle 1 ……………………………….………………….………………………… page 1
Subtitle 2 ……………………………….………………….………………………… page 1, 2
Conclusion………………………………………………………………………....... page 3
References………………………………………………………………………....... page 3
Major League Baseball (“MLB”) Monopoly Structure
Introduction
Major League Baseball (“MLB”) is the only American Industry that is a self-regulating monopoly exempt from anti-trust law. In 1922, there was the U.S. Supreme Court Case of Federal Baseball Club v. National League and the judge unanimously decided that the Sherman Antitrust Act was not applicable to MLB and could therefore regulate as a monopoly. Furthermore, this decision was later reaffirmed in 1952 and 1972 in two different U.S. Supreme Court cases. This antitrust exemption has given increased monopolistic power to the MLB organization.
MLB Monopolistic Characteristics Monopoly is defined as “A market structure in which there is only a single seller of a good, service, or resource. In antitrust law, a dominant firm that accounts for a very high percentage of total sales within a particular market.” The following characteristics that label the MLB as a Monopoly are the following: (a) one unique firm/product (i.e., no other industry like the MLB and it’s impossible to duplicate); (b) absence of competition (i.e., granted from anti-trust laws); (c) profit maximization (i.e., attendance increasing even as prices increasing); (d) “Price Makers” (i.e., control price and possible price discrimination); and (e) impenetrable barriers of entry into market (i.e., highly unlikely to enter into industry). MLB Controlling Powers Major League Baseball and specifically their team owners can raise ticket and concession prices whenever they want to increase profits. For example, less desirable
Major League Baseball (“MLB”) Monopoly Structure
Andrew C. Brniak andrewbrniak@yahoo.com Content
Introduction…………………………………………………………………………...page 1
Subtitle 1 ……………………………….………………….………………………… page 1
Subtitle 2 ……………………………….………………….………………………… page 1, 2
Conclusion………………………………………………………………………....... page 3
References………………………………………………………………………....... page 3
Major League Baseball (“MLB”) Monopoly Structure
Introduction
Major League Baseball (“MLB”) is the only American Industry that is a self-regulating monopoly exempt from anti-trust law. In 1922, there was the U.S. Supreme Court Case of Federal Baseball Club v. National League and the judge unanimously decided that the Sherman Antitrust Act was not applicable to MLB and could therefore regulate as a monopoly. Furthermore, this decision was later reaffirmed in 1952 and 1972 in two different U.S. Supreme Court cases. This antitrust exemption has given increased monopolistic power to the MLB organization.
MLB Monopolistic Characteristics Monopoly is defined as “A market structure in which there is only a single seller of a good, service, or resource. In antitrust law, a dominant firm that accounts for a very high percentage of total sales within a particular market.” The following characteristics that label the MLB as a Monopoly are the following: (a) one unique firm/product (i.e., no other industry like the MLB and it’s impossible to duplicate); (b) absence of competition (i.e., granted from anti-trust laws); (c) profit maximization (i.e., attendance increasing even as prices increasing); (d) “Price Makers” (i.e., control price and possible price discrimination); and (e) impenetrable barriers of entry into market (i.e., highly unlikely to enter into industry). MLB Controlling Powers Major League Baseball and specifically their team owners can raise ticket and concession prices whenever they want to increase profits. For example, less desirable
References: Haupert, Michael, edit by Robert Whaples. (2007, December 3). The Economic History of Major League Baseball. Retrieved September 26,2011, from EH.Net Encyclopedia Web site: http://eh.net/encyclopedia/article/haupert.mlb McConnell, Campbell R. Economics, 19th Edition. McGraw-Hill Learning Solutions, 2012. p. G-18