Review of Industrial Organization

, Volume 14, Issue 3, pp 205–217 | Cite as

Free-Agency and the Competitiveness of Major League Baseball

  • Craig A. DepkenII


I investigate whether the removal of the reserve clause in professional baseball affected the competitive nature of the industry in the context of whether the distribution of team wins has been affected by free-agency. Unlike previous studies which use the standard deviation of winning percentage, I use a more sensitive measure of parity. I calculate the deviations of the Herfindahl-Hirschman Index of team wins from the competitive ideal during 1920 to 1996 and relate them to player-talent distribution and structural changes in the industry. I isolate the structural effect of free-agency and find that it has adversely affected the parity of the American League but that it has had no statistical influence on the parity of the National League.


Standard Deviation Structural Change Industrial Organization Structural Effect Sensitive Measure 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Kluwer Academic Publishers 1999

Authors and Affiliations

  • Craig A. DepkenII
    • 1
  1. 1.The University of TX at Arlington, Department of EconomicsArlingtonU.S.A

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