In the United States, major league baseball is exempt from antitrust laws. Before 1975, the baseball team owners agreed to hold an annual draft of amateur baseball players. Once the players were drafted and signed by a team, they were effectively tied to that team for life. Before 1975, professional baseball players were paid:

Question

Quizplus · Accepted Answer

Because players were tied to their teams for life, the competition for their services was restricted, which likely suppressed their wages. This suggests that before 1975, players were paid less than their marginal revenue product.

In the United States, Major League Baseball Is Exempt from Antitrust