Competition within a cartel: League conduct and team conduct in the marketfor baseball player services

A model of major league baseball is developed which distinguishes between l eague behavior and individual team behavior. The league is viewed as settin g rules that restrict the team's willingness to pay and/or impose costs on the transfer of players between teams. Given these rules, teams then compet e for player services. The model is estimated and tested. The evidence sugg ests that the restrictive effect of league rules on player salaries decline d between 1986-1988 and 1989-1991, consistent with anecdotal evidence. With in the rules established by the league, however, teams appear to behave as competitive price-takers through the entire sample period.