Interleague Competition

In the NYT today, a curious passage about the international baseball free-agent market.

As interest from scouts affiliated with Major League Baseball escalated and Japan’s Oct. 30 draft of amateur players approached, Tazawa requested that all Japanese teams not select him. They acquiesced, smoothing his path to the United States’ free market.

Except the market is not entirely free. Officials of major league teams have a wide spectrum of views as to whether Tazawa should be signed.

Here we have the unusual case of two monopoly cartels -- the baseball cartels in the U.S. and Japan -- competing for a scarce input -- Mr. Tazawa. He is a rather unique case of brand new Japanese talent not connected with the Japanese monopoly trying to sell his services within the U.S. cartel.

Now, the hidden point of the article seems to be that the leagues would rather not have to compete with each other for inputs; instead, they'd rather control their own supplies. The leagues had previously set up formal and informal rules making it difficult for young players to sign with any team in the other league.

But some teams in the U.S. cartel see a first-mover or market-shifting advantage to hiring Mr. Tazawa, so not at all surprisingly, there are differing views of how well the current territorial agreements are working.

Any which way, there's little either side can do about it. The U.S. league may cross the antitrust barrier if they try to stop the acquisition of Mr. Tazawa and others.

As for formalizing any rule barring the signing of amateurs outright, some major league team officials think that could violate American antitrust or anti-discrimination laws. And if one team pursues a top player, others will surely follow.

Then the floodgates will have opened, leading perhaps to the dreaded bidding war -- featuring not just intra-league, but also inter-league competition -- for new talent.

So it's left to the Japanese league to punish the poaching -- by punishing the players, or course!

Fearful that Tazawa’s signing would encourage more Japanese amateurs to follow him, Nippon Professional Baseball recently passed a rule that requires any amateur who jumps to a major league team to sit out two or three years before being able to return to play in Japan.

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This page contains a single entry by Kevin published on November 20, 2008 2:46 PM.

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