BARGAINING IN THE TRANSFER MARKET - THEORY AND EVIDENCE

This paper examines the transfer market for association football playe rs as operated in the English Football League using transfer data for the 1990-91 season. After describing the purposes and procedures invol ved in the transfer system together with the motives of the participan ts, we apply two-person bargaining theory to analyse the determination of transfer fees. The data and estimation procedures are explained an d the results reported and interpreted. Our analysis suggests that the Nash bargaining theory captures the salient features of the bargainin g process in the footballers' transfer market.