Scenario: the Following Excerpt Is from Timothy R

question 31

Multiple Choice

Scenario: The following excerpt is from Timothy R. Hylan, Maureen J. Lage, and Michael Treglia, "The Coase Theorem, Free Agency, and Major League Baseball: A Panel Study of Pitcher Mobility from 1961 to 1992" ( Southern Economic Journal 62, no. 4 (1996) : 1029-42) .
Many economists and legal scholars interpret the [Coase] theorem as containing two propositions. The first is that, in the absence of transactions costs and wealth effects, parties will bargain to an efficient outcome. The second holds that the same outcome will be achieved regardless of the distribution of property rights. … Major League Baseball [MLB] presents a natural experiment consisting of an industry in which there has been an explicit change in the assignment of property rights. Beginning in 1879, … a player could negotiate salary only with the team that owned his contract and the team could trade or sell the player as management saw fit. In 1976 this system was replaced by the institution of free agency whereby a player with at least six years of Major League experience acquired the right to sell his services to prospective buyers…. The empirical analysis shows that after the introduction of free agency, the pitchers with greater longevity in the major leagues are less likely to move relative to their mobility in the pre-free agency period. The results also indicate that, in general, better pitchers are less likely to move and that pitchers playing on teams with higher winning percentages or in large market cities were less likely to move.
-Refer to the scenario above.Which of the following could be a cause for different patterns of player mobility in MLB before and after 1976?

• A) Property rights for players' services are not clearly defined in MLB.
• B) The number of teams relative to the number of players is large.
• C) MLB is a monopoly in professional baseball games in the United States.
• D) Transaction costs are associated with negotiating with individual free agents.

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Definitions:

Content Conflict

Conflict that tends to focus on disagreements over what a statement or concept means.

Job Description

A formal account of an employee's responsibilities, duties, and the scope of the job they're employed to do.

Ambiguous

Something that can be understood in more than one way or is not explicitly defined, leading to uncertainty or confusion.

Thomas-Kilman Conflict Model

A framework that identifies five approaches individuals use to handle conflict: avoiding, accommodating, competing, compromising, and collaborating.