Major League Baseball (“MLB”) is the only American Industry that is a self-regulating monopoly exempt from anti-trust law. In 1922, there was the U. S. Supreme Court Case of Federal Baseball Club v. National League and the judge unanimously decided that the Sherman Antitrust Act was not applicable to MLB and could therefore regulate as a monopoly. Furthermore, this decision was later reaffirmed in 1952 and 1972 in two different U. S. Supreme Court cases. This antitrust exemption has given increased monopolistic power to the MLB organization.
MLB Monopolistic Characteristics Monopoly is defined as “A market structure in which there is only a single seller of a good, service, or resource. In antitrust law, a dominant firm that accounts for a very high percentage of total sales within a particular market. ” The following characteristics that label the MLB as a Monopoly are the following: (a) one unique firm/product (i. e. , no other industry like the MLB and it’s impossible to duplicate); (b) absence of competition (i.
e. , granted from anti-trust laws); (c) profit maximization (i. e. , attendance increasing even as prices increasing); (d).
“Price Makers” (i. e. , control price and possible price discrimination); and (e) impenetrable barriers of entry into market (i. e. , highly unlikely to enter into industry). MLB Controlling Powers Major League Baseball and specifically their team owners can raise ticket and concession prices whenever they want to increase profits. For example, less desirable stadium seats are much lower in price than “good” seats. The MLB also sets prices based on team location.
For example, I know first-hand that prices for the New York Yankees are much higher than those for the Chicago White Sox. In addition to controlling prices, MLB also controls output. They set the season schedule at 162 games with half of those being home games. Since there are limited amounts of homes games owners know that they can keep increasing prices for tickets and concession stands. Conclusion Major League Baseball’s ability to control prices, set extreme difficulty on barriers of entry and to eliminate competition definitely identifies them as a Monopoly market structure.
Furthermore their use of pricing strategies, which include setting ticket prices according to the view of the field, discount group pricing for lower attended weekday games and games against lesser teams, discounts for seniors/students/military, increased prices for suites and luxury boxes, and parking priced depending on location to stadium (i. e. , closer parking to stadium is more expensive). However, even with all of these increasing prices and price controls the MLB continues to set attendance records each and every year.
I personally love Major League Baseball and I’m willing to pay any prices when I want to go to the ballpark and watch a game.
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