ABSTRACT
This chapter examines how professional sports leagues have exerted monopsony power over their players. In a monopsony labor market, workers can sell their services only to the monopsony employer. The chapter shows how the different sports unions have exerted countervailing monopoly power by controlling the labor input. It explores how leagues exert monopsony power on players and how unions serve as a countervailing force on teams' monopsony power and how they have increased player income. The chapter explains how free agency changed the economic relationship between players and teams and what teams have done to limit its impact. It provides the inefficiency of strikes, why strikes occur despite their contradicting basic economic logic, and why professional sports are particularly susceptible to strikes. The chapter looks at the reserve clause and the monopsony power it gave owners and explains the advent of free agency in professional sports and the degree to which it has boosted the salaries of players.
