Review of the Economist’s Arsenal
This chapter examines how professional sports leagues have exerted monopsony power. It shows how the different sports unions have exerted countervailing monopoly power by controlling the labor input. Industrial unions represent workers with many different skills. As a result, they leave hiring and firing to the employer. Like craft unions, industrial unions push up wages, but they do so through collective bargaining. Unlike the major North American team sports, tennis players have a rulebook rather than a collective bargaining agreement. The source of this difference lies in the fact that the Association of Tennis Professionals (ATP) and Women's Tennis Association (WTA) do not engage in negotiations with a single management group. Professional tennis players and golfers have established their own associations. These unions resemble craft unions in that they set out rules for players that limit the supply of labor and rules for employers that seek to hire players.