monopsony model tend to focus on a mining town with one employer and apparently citizens
who didn’t have any feet!
Although many economists in the past might have mentioned the mono-
psony story briefly, the standard Clark—ECON 101—model generally appeared to dominate their
At least, for those who didn’t study sports. Economists who thought about sports—beginning with
—have always known that wages are not determined by an impersonal labor
market. Wages are primarily determined by bargaining power. And when it comes to sports, the wages
of workers were historically reduced by the monopsonistic power held by the teams.
The study of sports doesn’t just allow one to theorize about the workings of a monopsonistic market.
Sports comes with an abundance of data on worker productivity. Consequently, Berri and Krautmann
didn’t just argue that Bob Gibson was likely exploited—or paid a wage less than his economic
—in 1968. These authors could also say that given Gibson’s esti mated production of wins
pitching for the St. Louis Cardinals that season (he was worth an estimated 10.38 wins), Gibson was
worth US$247,389 to the Cardinals.
Because he was only paid US$85,000, Gibson was definitely
exploited. And this exploitation came about because the labor market for baseball players in 1968 was
dominated by the monopsony power of the baseball team owners.
Gibson was not the only athlete exploited in 1968. The monopsony power enjoyed by
baseball teams in the 1960s was also enjoyed by other leagues like the National Basketball
Association (NBA). The purpose of this inquiry is to explore how the monopsony power of the NBA
was briefly broken in NBA. There are many players in this saga. But the one we will focus on is Oscar
Robertson became the head of the National Basketball Player’s Association (NBPA) in 1966. At the
time, he was the first black athlete to lead the labor union of a major men’s professional sports league.
In 1970, Robertson and the NBPA filed a suit—known as the “Oscar Robertson Suit”—to stop a
proposed merger between the NBA and the American Basketball Association (ABA). Six years later,
the leagues did merge. But that merger only came about after the NBA agreed to the “Oscar Robertson
Rule,” which established the NBA’s initial free agent market.
As the current NBA commissioner Adam Silver stated in 2020:
the model argues—for a monopsony to hire more workers, they must raise the wages of all existing workers. This feature in
the model can’t possibly match reality. Firms do not consistently pay workers the same wage (anyone who had a part-time job
at some point would see this). Why would an absolute monopsony feel obliged to do this? It appears whoever originated the
graphical representation of a monopsony invented this story simply to make the graph work.
2. Id. at 80. The classic example of a pure monopsony—from EHRENBERG &SMITH—is a mining town where the owner of the
mine employs everyone in the town. Although such a mine might have monopsony power (in fact, that seems likely), the
mining town can’t be a pure monopsony. People have feet. They can leave the town and go work someplace else. Obviously
leaving the town imposes a cost on workers, hence the mine would have monopsony power. But it would not be a “pure
3. Simon Rottenberg, The Baseball Players’ Labor Market,64J.P
OL.ECON. 242 (1956).
4. Gerald W. Scully, Pay and Performance in Major League Baseball,64A
M.ECON.REV. 915 (1974).
5. David J. Berri & Anthony Krautmann, How Much Did Baseball’s Antitrust Exemption Cost Bob Gibson? 64 ANTITRUST BULL.
6. JOAN ROBINSON defined the term exploitation in 1933. As obinson noted: “It (exploitation) is usually said that a factor of
production is exploited if it is employed at a price which is less than its marginal net productivity.” “Marginal net
productivity” is another way to say “economic value.” Today economists refer to “economic value” as marginal revenue
product. JOAN ROBINSON,THE ECONOMICS OF IMPERFECT COMPETITION 281–82 (2nd ed. 1969).
7. This assumes baseball teams were giving 50%of their revenue to their players. Berri & Krautmann, supra note 5, at 582 also
examine Gibson’s value if the split was 40%,60%,or70%. For all splits examined, Gibson was exploited.