In the age before free agency, the labor of Major League Baseball (MLB) players was the property of their team owners. The owners had complete control of whether to trade their players away or keep them on the roster. In the period of free agency, players had the right to sell their services to the highest-bidding team. The Coase theorem predicted that:

Question

Quizplus · Accepted Answer

The Coase theorem suggests that in the presence of clear property rights and low transaction costs, resources will flow to their most valued use regardless of the initial distribution of those rights. In the context of MLB, this means that free agency would allow players to move to teams that value their talents the most, without necessarily changing the overall distribution of talent across teams.

In the Age Before Free Agency, the Labor of Major