Vrooman Econ 280 ZAM Part 1
BRING IT, CHUMPZILLA. (4 points total)
1. Discuss the Coase theorem and explain how it relates to Rottenberg's weak form invariance proposition. What is Rottenberg's opinion of the real effects of each of the proposed institutional changes to the baseball players labor market? What is the Yankee paradox and according to Rottenberg, how will it be internalized, and what is the only way to "break up the Yankees"? Compare and contrast the strengths and weaknesses of Scully's and Quirk and Fort's sports league theories, with specific reference to their conclusions about the effects of revenue sharing. Briefly show how the theory can be applied to the relationship between U Tennessee and Vandy in SEC football.
Compare and contrast competitive balance (standard deviations) in MLB, NBA and NFL in the free agency period. Discuss how the general theory can explain the apparent revenue/competitive balance contradiction in MLB. Explain how a player's Marginal Revenue Product is determined and discuss how the interaction of two separate types of diminishing marginal returns relate to the recent acquisitions of Alex Rodriquez by New York Yankees and Carlos Beltran by the New York Mets. In specific terms of the general theory, discuss (and show) the effects of Gary Sheffield giving the NY Yankees a "discount"when he signed as free agent in 2004. Compare this to the Yankee premium early in 1990's.
Vrooman Econ 280 ZAM Part 2
BRING IT, CHUMPZILLA. (4 points each)
2. Compare the relation of pay and MRP's an years of experience of MLB players before and after the institution of free agency. Discuss the specific differences between the salary history of Derek Jeter (Yankees) and Andruw Jones (Braves) on one hand and Jason Giambi and Carlos Beltran on the other. Compare and contrast the fortunes of the NY Mets and the LA Dodgers with the Twins and Pirates in the pre-strike interim 1990-94. Explain how contradictory evidence on player movement and randomization of MLB before the strike of 1994 could happen together. How has competitive balance (beta coefficients) for all the leagues evolved since the 1994 MLB strike. Explain why free agents are overpaid, and discuss how to resolve the problem. Finally, compare and contrast the performance history and philosophies of the NY Yankees, NY Mets and Atlanta Braves from the early 1990's to the present.
3. Compare and contrast the sportsman and Steinbrenner effects in the operation of MLB clubs. Discuss the separation (irrelevance) theorem and why the sportsman effect is necessary for the Steinbrenner effect to occur. How can the use of debt affect agency effects in general and the Steinbrenner effect in particular? Show exactly how an LBO works and why financial economists think they are efficient. Discuss the implications of these agency effects for MLB ownership since 1980, and explain the behavior of the Atlanta Braves, Boston Red Sox and KC Royals in light of ownership changes over the last 25 years. Discuss the empirical evidence of sportsman and agency effects from MLB ownership transfers over the free agency period.